Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 9,800 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 $106,600. However, its equipment (with a five-year remaining life) was undervalued by $9,200 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $31,200, 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 $ (625,000 ) $ (270,000 ) Expenses 446,000 141,000 Investment income Not given 0 Dividends declared 90,000 60,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenues $ (736,000 ) $ (322,000 ) Expenses 470,800 177,500 Investment income Not given 0 Dividends declared 100,000 40,000 Equipment 524,000 398,000 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.
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 9,800 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 $106,600. However, its equipment (with a five-year remaining life) was undervalued by $9,200 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $31,200, 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 | $ | (625,000 | ) | $ | (270,000 | ) |
| Expenses | 446,000 | 141,000 | ||||
| Investment income | Not given | 0 | ||||
| Dividends declared | 90,000 | 60,000 | ||||
The following balances come from the individual accounting records of these two companies as of December 31, 2018:
| Haynes | Turner | |||||
| Revenues | $ | (736,000 | ) | $ | (322,000 | ) |
| Expenses | 470,800 | 177,500 | ||||
| Investment income | Not given | 0 | ||||
| Dividends declared | 100,000 | 40,000 | ||||
| Equipment | 524,000 | 398,000 | ||||
Prepare entry *C for the beginning of the
Retained earning is the amount kept by the company for the future growth purpose.
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