Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2020, by issuing 11,700 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 $134,050. However, its equipment (with a five-year remaining life) was undervalued by $7,550 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $33,900, 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, 2020:     Haynes Turner Revenues $ (730,000 ) $ (240,000 ) Expenses   493,000     125,000   Investment income   Not given     0   Dividends declared   120,000     50,000     The following balances come from the individual accounting records of these two companies as of December 31, 2021:     Haynes Turner Revenues $ (913,000 ) $ (310,000 ) Expenses   519,300     162,100   Investment income   Not given     0   Dividends declared   140,000     30,000   Equipment   572,000     383,000       What balance does Haynes’s Investment in Turner account show on December 31, 2021, when the equity method is applied? What is the consolidated net income for the year ending December 31, 2021? What is the consolidated equipment balance as of December 31, 2021?

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2020, by issuing 11,700 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 $134,050. However, its equipment (with a five-year remaining life) was undervalued by $7,550 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $33,900, 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, 2020:

 

  Haynes Turner
Revenues $ (730,000 ) $ (240,000 )
Expenses   493,000     125,000  
Investment income   Not given     0  
Dividends declared   120,000     50,000  
 


The following balances come from the individual accounting records of these two companies as of December 31, 2021:

 

  Haynes Turner
Revenues $ (913,000 ) $ (310,000 )
Expenses   519,300     162,100  
Investment income   Not given     0  
Dividends declared   140,000     30,000  
Equipment   572,000     383,000  
 

 

  1. What balance does Haynes’s Investment in Turner account show on December 31, 2021, when the equity method is applied?

  2. What is the consolidated net income for the year ending December 31, 2021?

  3. What is the consolidated equipment balance as of December 31, 2021?

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