Herbert, Inc., acquired all of Rambis Companys outstanding stock on January 1, 2014, for $599,000 in cash. Annual excess amortization of $17,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $486,000, and Rambis reported a $220,000 balance. Herbert reported internal net income of $41,000 in 2014 and $55,600 in 2015 and declared $10,000 in dividends each year. Rambis reported net income of $27,500 in 2014 and $42,100 in 2015 and declared $5,000 in dividends each year.

Assume that Herberts internal net income figures above do not include any income from the subsidiary.

a-1.	If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2015?

a-2.	What would be the amount of consolidated retained earnings on December 31, 2015, if the parent had applied either the initial value or partial equity method for internal accounting purposes?
	Consolidated Retained Earnings (initial value method): Consolidated Retained Earnings (partial equity method):

b.	Under each of the following situations, what is the Investment in Rambis account balance on Herberts books on January 1, 2015?
	Equity method: Partial Equity method: Initial value method:

c.

Prepare entry *C for each of the following methods as of Jan 1, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Prepare entry *C if the parent used the equity method Prepare entry *C if the parent used the partial equity method Prepare entry *C if the parent used the initial value method