Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 3-14 (LO 3-3, 3-4) Herbert, Inc., acquired all of Rambis Companys outstanding stock on January 1, 2017, for $648,000 in cash. Annual excess amortization

Problem 3-14 (LO 3-3, 3-4)

Herbert, Inc., acquired all of Rambis Companys outstanding stock on January 1, 2017, for $648,000 in cash. Annual excess amortization of $17,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $449,000, and Rambis reported a $298,000 balance. Herbert reported internal net income of $41,500 in 2017 and $61,100 in 2018 and declared $10,000 in dividends each year. Rambis reported net income of $27,600 in 2017 and $47,200 in 2018 and declared $5,000 in dividends each year.

a. Assume that Herberts 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 31, 2017?

What would be the amount of consolidated retained earnings on December 31, 2017, if the parent had applied either the initial value or partial equity method for internal accounting purposes?

b. Under each of the following situations, what is the Investment in Rambis account balance on Herberts books on January 1, 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.

The parent uses the partial equity method.

The parent uses the initial value method.

Assume that Herberts 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 31, 2015?

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?

Show less

Consolidated retained earnings (equity method)
Consolidated retained earnings (initial value method)
Consolidated retained earnings (partial equity method)

Under each of the following situations, what is the Investment in Rambis account balance on Herberts books on January 1, 2018?

The parent uses the equity method.

The parent uses the partial equity method.

The parent uses the initial value method.

Show less

Investment
Equity method
Partial equity method
Initial value method

Under each of the following situations, what is Entry *C on a 2018 consolidation worksheet? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

The parent uses the equity method.

The parent uses the partial equity method.

The parent uses the initial value method.

Show less

Consolidation Worksheet Entries

Prepare entry *C if the parent used the equity method.

Note: Enter debits before credits.

Prepare entry *C if the parent used the partial equity method.

Note: Enter debits before credits.

Date Accounts Debit Credit
January 01, 2018

Prepare entry *C if the parent used the initial value method.

Note: Enter debits before credits.

Date Accounts Debit Credit
January 01, 2018
Date Accounts Debit Credit
January 01, 2018

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Energy Audits

Authors: Albert Thumann, Terry Niehus, William J. Younger

9th Edition

1466561629, 978-1466561625

More Books

Students also viewed these Accounting questions

Question

Describe recruitment and selection for international operations.

Answered: 1 week ago