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wconnectmhedkxation.com/flow/connerthtml Help Save&Exit; Sub Cheek my wo Herbert, inc·acquired all of Rambis Company's outstanding stock on January t 2017, for S595.000 in cash Annual excess amortization of 316,000 results from this transaction On the date of the takeover, Herbert reported retained earnings of $402,000, and Rambis reported a $229,000 balance. Herbert reported internal net income of $51000 in 2017 and 564,500 in 2018 and declared S10,000 in dividends each year Rambis reported net income of $24,500 in 2017 and $38,000 in 2018 and declared $5,000 in dividends each year a. Assume that Herbert's internal net income figures above do not include any income from the subsidiary - If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 3t, 2018 . what would be the amount of consolidated reta ned eamings on December 31, 2018-at the p?? ent had applied either the initial value or partial equity method for internal accounting purposes b. Under each of the following situations, wh at is the Investment in Rambis account balance on Herbert's books on January t 2018 The parent uses the equity method The parent uses the partial equity method The parent uses the initial value method . c. Under each of the following situations what is Entry "C on a 2018 consolidation worksheet? The parent uses the equity method . Thc parent uses tne parla/equity method · The parent uses the initial value method Complete this question by ent oring your answers in the tabs belowExplanation / Answer
Part (a) If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2012? Unider Equity method herbert (Parent) balance 1/1/17 402000 Herber Income 2017 51000 Less:herbert Dividends 2017 (Subsidary Dividends (eiminated) -10000 Rambis income 2017 24500 Amortization 2017 -16000 Herbert income 2018 64500 herbert Dividends 2018 -10000 Rambis income 2018 38000 Amortization 2018 -16000 Consolidated retained earnings 12/31/2018 528000 Would the amount of consolidated retained earnings change if the parent had applied either the initial value or partial equity method for internal accounting purposes? Consolidated retained earnings are the same regardless of the method in use: the beginning balance plus the income of the parent less the dividends of the parent plus the income of the subsidiary less amortization expense. Thus, consolidated retained earnings on December 31, 2018 are $528,000 as computed in Above (b) Under each of the following situations, what is the Investment in Rambis account balance on Herbert’s books on January 1, 2012? Amount in $ The parent uses the equity method rambis fair value 1/1/17 595000 rambis income 2017 24500 rambis Dividends 2017 -5000 Herbert’s 2012 excess fair over book value amortization -16000 Investment balance 1/1/18 598500 Investment in Rambis—partial equity method rambis fair value 1/1/17 595000 rambis income 2017 24500 rambis Dividends 2017 -5000 Investment balance 1/1/18 614500 Investment in Rambis—Initial value method rambis fair value 1/1/17 595000 Investment balance 1/1/18 595000 (C ) Under each of the following situations, what is Entry *C on a 2013 consolidation worksheet? Date general Journal Debit Credit The parent Uses the Equity method 01-01-2018 No entry is needed to convert the past figures to the equity method since that method has already been applied. The Parent uses The partial Equity method 01-01-2018 Reatined Earnings 1/1/18 $16000 To Investment in rambis $16000 (Being method Changed to partial Equity method has been recorded (598500-614500) The Parent uses The Initail Value method 01-01-2018 Investment in rambis $3500 To retained earnings 01/01/2018 $3500 (Being method Changed to Initial method has been recorded (598500-595000)
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