Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 10,000 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 $100,000. However, its equipment (with a five-year remaining life) was undervalued by $5,000 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $30,000, 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 $(600,000) $(230,000) Expenses 440,000 120,000 Investment income Not given –0– Dividends declared 80,000 50,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenues $(700,000) $(280,000) Expenses 460,000 150,000 Investment income Not given –0– Dividends declared 90,000 40,000 Equipment 500,000 300,000 What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? What is the consolidated net income for the year ending December 31, 2018? What is the consolidated equipment balances as of December 31, 2018? How would this answer be affected by the investment method applied by the parent? If Haynes has applied the initial value method to account for its investment, what adjustment is needed to the beginning of the Retained Earnings account on a December 31, 2018, consolidation worksheet? How would this answer change if the partial equity method had been in use? How would this answer change if the equity method had been in use?

Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 10,000 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 $100,000. However, its equipment (with a five-year remaining life) was undervalued by $5,000 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $30,000, 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 $(600,000) $(230,000) Expenses 440,000 120,000 Investment income Not given –0– Dividends declared 80,000 50,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenues $(700,000) $(280,000) Expenses 460,000 150,000 Investment income Not given –0– Dividends declared 90,000 40,000 Equipment 500,000 300,000 What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? What is the consolidated net income for the year ending December 31, 2018? What is the consolidated equipment balances as of December 31, 2018? How would this answer be affected by the investment method applied by the parent? If Haynes has applied the initial value method to account for its investment, what adjustment is needed to the beginning of the Retained Earnings account on a December 31, 2018, consolidation worksheet? How would this answer change if the partial equity method had been in use? How would this answer change if the equity method had been in use?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

The following balances come from the individual accounting records of these two companies as of December 31, 2017:

	Haynes	Turner
Revenues	$(600,000)	$(230,000)
Expenses	440,000	120,000
Investment income	Not given	–0–
Dividends declared	80,000	50,000

The following balances come from the individual accounting records of these two companies as of December 31, 2018:

	Haynes	Turner
Revenues	$(700,000)	$(280,000)
Expenses	460,000	150,000
Investment income	Not given	–0–
Dividends declared	90,000	40,000
Equipment	500,000	300,000

What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied?
What is the consolidated net income for the year ending December 31, 2018?
What is the consolidated equipment balances as of December 31, 2018? How would this answer be affected by the investment method applied by the parent?
If Haynes has applied the initial value method to account for its investment, what adjustment is needed to the beginning of the Retained Earnings account on a December 31, 2018, consolidation worksheet? How would this answer change if the partial equity method had been in use? How would this answer change if the equity method had been in use?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.