(Solution) 15 1/1/14 2014 Journal Entries For Herbert Inc. To Record The Acquistion Transaction Investment In Rambis Company Cash To Record Receipt Of Dividend... | Snapessays.com


(Solution) 15 1/1/14 2014 journal entries for Herbert Inc. To record the acquistion transaction Investment in Rambis Company Cash To record receipt of dividend...


Herbert, Inc. acquired all of Rambis Company’s outstanding stock on January 1, 2014 for $ 574,000 in cash. Annual excess amortization of $ 12,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $ 400,000, and Rambis reported a $ 200,000 balance. Herbert reported internal income of $ 40,000 in 2014 and $ 50,000 in 2015 and paid $ 10,000 in dividends each year. Rambis reported net income of $ 20,000 in 2014 and $ 30,000 in 2015 and paid $ 5,000 in dividends each year. Assume that Herbert’s internal income figures above do not include any income from the subsidiary. The parent uses the equity method. A.  What is the amount reported as consolidated Retained Earnings on December 31, 2014? B. What is the amount reported as consolidated Retained Earnings on December 31, 2015? C.  What is the Investment in Rambis account balance on Herbert’s books on January 1, 2014 when the parent uses the equity method? D.  What is the Investment in Rambis account balance on Herbert’s books on January 1, 2015 when the parent uses the equity method?1 of 2

 

15

 

2014 journal entries for Herbert Inc.

 

To record the acquis±on transac±on

 

1/1/14

 

Investment in Rambis Company

 

Cash

 

To record receipt of dividend

 

12/31/14

 

Cash

 

Investment in Rambis Company

 

To accrue the subsidiary income

 

12/31/14

 

Investment in Rambis Company

 

Equity in Subsidiary Earnings

 

To recognize amor±za±on on alloca±ons

 

12/31/14

 

Equity in Subsidiary Earnings

 

Investment in Rambis Company

 

Investment in Rambis

 

Equity in Subsidiary Earnings

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

Herbert's Internal Income

 

Add: Equity in Investee Income

 

Net Income

 

Retained Earnings 1/1/14

 

Add: Net Income

 

Less: Dividends Paid

 

Retained Earnings 12/31/14

 

2015 journal entries for Herbert Inc.

 

To record receipt of dividend

 

12/31/15

 

Cash

 

Investment in Rambis Company

 

To accrue the subsidiary income

 

12/31/15

 

Investment in Rambis Company

 

Equity in Subsidiary Earnings

 

To recognize amor±za±on on alloca±ons

 

12/31/15

 

Equity in Subsidiary Earnings

 

Investment in Rambis Company

 

Investment in Rambis

 

Equity in Subsidiary Earnings

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

Herbert's Internal Income

 

Add: Equity in Investee Income

 

Note: Since the equity method is used, Herbert's net income and retained earnings includes the accrual for the subsidiary's

 

income. So the consolidated retained earnings will be the same as Herbert's retained earnings

 


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This question was answered on: May 23, 2022

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