1) The Hoover Corporation acquired 80 percent of the 100,000 outstanding voting shares of Rainbow, Inc., for $6.40 per share on January 1, 2020. The remaining 20 percent of Rainbow’s shares also traded actively at $6.40 per share before and after Hoover’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Rainbow’s underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Rainbow reported common stock of $100,000 and a retained earnings balance of $260,000. On December 31, 2021, Hoover has trademark with a book value of $148,000 and Rainbow has trademark with a book value of $206,000. What is the consolidated balance for the Trademarks account as of December 31, 2021?
a. $407.600
b. $354,000.
c. $414,300.
d. $421,000.
2) The Hoover Corporation acquired 80 percent of the 100,000 outstanding voting shares of Rainbow, Inc., for $6.40 per share on January 1, 2020. The remaining 20 percent of Rainbow’s shares also traded actively at $6.40 per share before and after Hoover’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Rainbow’s underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Rainbow reported common stock of $100,000 and a retained earnings balance of $260,000. On January 1, 2021, Rainbow reported retained earnings of $330,000. During year 2021, Rainbow reported net income of $170,000 and declared dividend of $20,000. Assume Hoover applied equity method to account for its investment in Rainbow, the balance of Investment in Rainbow Hoover reported on December 31, 2021 should be:
a. $649.800
b. $634,970.
c. $616,250.
d. $657,440.