Turner Haynes $(600,000) 440,000 Not given Revenues $(230,000) Expenses Investment income -0- Dividends declared 80,000 50,000 Turner Revenues Expenses Haynes $(700,000) 460,000 Not given $(280,000) Investment income Dividends declared Equipment -0- 90,000 500,000 40,000 300,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 9,000 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:
The following balances come from the individual accounting records of these two companies as of December 31, 2018:
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. What is the consolidated equipment balance as of December 31, 2018? How would this answer be affected by the investment method applied by the parent?
d. 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?

Turner
Haynes
$(600,000)
440,000
Not given
Revenues
$(230,000)
Expenses
Investment income
-0-
Dividends declared
80,000
50,000
Transcribed Image Text:Turner Haynes $(600,000) 440,000 Not given Revenues $(230,000) Expenses Investment income -0- Dividends declared 80,000 50,000
Turner
Revenues
Expenses
Haynes
$(700,000)
460,000
Not given
$(280,000)
Investment income
Dividends declared
Equipment
-0-
90,000
500,000
40,000
300,000
Transcribed Image Text:Turner Revenues Expenses Haynes $(700,000) 460,000 Not given $(280,000) Investment income Dividends declared Equipment -0- 90,000 500,000 40,000 300,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
S Corporations
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.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education