Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 11,600 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $133,050. However, its equipment (with a five-year remaining life) was undervalued by $9,550 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $31,400, although no value had been recorded on Turner’s books. The customer list had an estimated remaining useful life of 10 years. The following balances come from the individual accounting records of these two companies as of December 31, 2017: Haynes Turner Revenues $ (614,000 ) $ (298,000 ) Expenses 451,000 174,000 Investment income Not given 0 Dividends declared 80,000 60,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenues $ (741,000 ) $ (360,500 ) Expenses 473,800 211,600 Investment income Not given 0 Dividends declared 90,000 50,000 Equipment 527,000 340,000 a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? b. What is the consolidated net income for the year ending December 31, 2018? c-1. What is the consolidated equipment balance as of December 31, 2018? c-2. Would this answer be affected by the investment method applied by the parent? d. Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method. Req A to C2 Req D a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? b. What is the consolidated net income for the year ending December 31, 2018? c-1. What is the consolidated equipment balance as of December 31, 2018? c-2. Would this answer be affected by the investment method applied by the parent? Show less a. Investment in Turner account b. Consolidated net income c-1. Consolidated equipment c-2. Would this answer be affected by the investment method applied by the parent? Consolidation Worksheet Entries Prepare entry *C if the parent used the initial value method. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2018
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 11,600 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $133,050. However, its equipment (with a five-year remaining life) was undervalued by $9,550 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $31,400, although no value had been recorded on Turner’s books. The customer list had an estimated remaining useful life of 10 years.
The following balances come from the individual accounting records of these two companies as of December 31, 2017:
| Haynes | Turner | |||||
| Revenues | $ | (614,000 | ) | $ | (298,000 | ) |
| Expenses | 451,000 | 174,000 | ||||
| Investment income | Not given | 0 | ||||
| Dividends declared | 80,000 | 60,000 | ||||
The following balances come from the individual accounting records of these two companies as of December 31, 2018:
| Haynes | Turner | |||||
| Revenues | $ | (741,000 | ) | $ | (360,500 | ) |
| Expenses | 473,800 | 211,600 | ||||
| Investment income | Not given | 0 | ||||
| Dividends declared | 90,000 | 50,000 | ||||
| Equipment | 527,000 | 340,000 | ||||
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a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied?
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b. What is the consolidated net income for the year ending December 31, 2018?
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c-1. What is the consolidated equipment balance as of December 31, 2018?
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c-2. Would this answer be affected by the investment method applied by the parent?
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d. Prepare entry *C for the beginning of the
Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method.
- Req A to C2
- Req D
a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied?
b. What is the consolidated net income for the year ending December 31, 2018?
c-1. What is the consolidated equipment balance as of December 31, 2018?
c-2. Would this answer be affected by the investment method applied by the parent?
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- Prepare entry *C if the parent used the initial value method.
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