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Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2017, for $609,000 in...

Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2017, for $609,000 in cash. Annual excess amortization of $17,600 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $427,000, and Rambis reported a $239,000 balance. Herbert reported internal net income of $48,000 in 2017 and $59,500 in 2018 and declared $10,000 in dividends each year. Rambis reported net income of $28,000 in 2017 and $39,500 in 2018 and declared $5,000 in dividends each year.

A.

consolidated retained earnings (equity method)
consolidated retained earnings (initial value method
consolidated retained earnings (partial equity method)
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Answer #1
Computation of Consolidated Retained Earnings as per Equity Method:
Herbert Parent 1/1/2017 $ 4,27,000
Herbert Income 2017 $     48,000
Herbert Dividends 2017 (elimination of intercompany dividends) $   -10,000
Rambis Income 2017 (not included in Parent's Income) $     28,000
Amortization 2017 $   -17,600
Herbert Income 2018 $     59,500
Herbert Dividends 2018 $   -10,000
Rambis Income 2018 $     39,500
Amortization 2018 $   -17,600
Consolidated Retained Earnings 12/31/2018 $ 5,46,800
Here under the second method also consolidated retained earnings will remain same regardless of the method i.e $5,46,800.
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