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Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2012, for $642,000 in cash. Annual excess amortization of $11,200...
Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2012, for $642,000 in cash. Annual excess amortization of $11,200 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $497,000, and Rambis reported a $280,000 balance. Herbert reported internal income of $54,750 in 2012 and $68,650 in 2013 and paid $10,000 in dividends each year. Rambis reported net income of $21,300 in 2012 and $35,200 in 2013 and paid $5,000 in dividends each year.Assume that Herbert’s internal income figures above do not include any income from the subsidiary.a-1.If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2013? Consolidated retained earnings$ a-2.What would be the amount of consolidated retained earnings on December 31, 2012 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)$
