Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2020, by issuing 10,200 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 $106,150. However, its equipment (with a five-year remaining life) was undervalued by $9,050 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $37,800, 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
$
(718,000
)
$
(332,000
)
Expenses
461,000
142,000
Investment income
Not given
0
Dividends declared
130,000
90,000
The following balances come from the individual accounting records of these two companies as of December 31, 2021:…
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, 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:
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…
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- 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.…arrow_forwardHaynes, 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 fiveyear 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 Revenue $(600000) $(230000) Expenses 440000 120000 Investment income not given -0- Dividends declared 80000 50000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenue $(700000) $(280000)…arrow_forwardParkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 10,400 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $117,000. However, its equipment (with a 5-year remaining life) was undervalued by $7,100 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $31,900, although no value had been recorded on Salerno's books. The computer software 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, 2023: Items Revenues Expenses Investment income Dividends declared Salerno Parkovash $ (670,000) 478,000 Not given 100,000 $ (388,000) 202,000 0 90,000 The following balances come from the individual accounting records of these two companies as of December 31, 2024: Revenues Items Parkovash…arrow_forward
- 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:…arrow_forwardHaynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 11,200 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 $120,200. However, its equipment (with a five-year remaining life) was undervalued by $8,700 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $39,100, 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 $ (638,000 ) $ (351,000 ) Expenses 465,000 191,000 Investment income Not given 0 Dividends declared 90,000 80,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes…arrow_forwardParkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 10,200 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $106,150. However, its equipment (with a 5-year remaining life) was undervalued by $9,050 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $37,800, although no value had been recorded on Salerno's books. The computer software 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, 2023: Items Revenues Expenses Investment income. Dividends declared Items Parkovash $ (718,000) 461,000 Not given 130,000 The following balances come from the individual accounting records of these two companies as of December 31, 2024: Revenues Expenses Investment income. Dividends declared…arrow_forward
- 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:…arrow_forwardParkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 11,700 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $134,050. However, its equipment (with a 5-year remaining life) was undervalued by $7,550 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $33,900, although no value had been recorded on Salerno's books. The computer software 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, 2023: Salerno $ (240,000) 125,000 0 50,000 Items Revenues Expenses Investment income Dividends declared The following balances come from the individual accounting records of these two companies as of December 31, 2024: Salerno $(310,000) 162, 100 0 Items Parkovash $ (730,000) 493,000 Not given…arrow_forward4. On January 1, 2021, Evan Co. purchased all of the common stock of Kristopher Corp. by issuing 15,000 shares of $1 par value common stock. Evan’s shares had a $30 per share fair value. On that date, Kristopher reported a net book value of $275,000. However, its equipment (with a five-year remaining life) was undervalued by $60,000 in the company’s accounting records. Any excess of consideration transferred over fair value of assets and liabilities is assigned to an unrecorded patent to be amortized over ten years. During 2021, Kristopher earned net income of $155,000 and paid dividends of $40,000. Kristopher’s net income and dividends for 2022 were $178,000 and $65,000, respectively. Required: Calculate the balance in the investment account on the books of Evan Co. at the end of 2022 under each of the following methods: a. equity method b. partial equity method c. initial value method. .arrow_forward
- On January 1, 2024, Nana Company paid $100,000 for 8, 100 shares of Papa Company common stock. The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company. Papa reported net income of $55,000 for the year ended December 31, 2024. The fair value of the Papa stock on that date was $55 per share. What amount will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2024? A: $400, 500B: $445, 500C: $385,500D: $ 370, 500arrow_forwardOn January 1, 2024, Nana Company paid $100,000 for 6,300 shares of Papa Company common stock. The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company. Papa reported net Income of $51,000 for the year ended December 31, 2024. The fair value of the Papa stock on that date was $50 per share. What amount will be reported in the balance sheet of Nana Company for the Investment in Papa at December 31, 2024? Multiple Choice O O $270,000 $315,000 $255,000 $240,000arrow_forwardBuyCo, Inc., holds 28 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $12,000 per year. For 2020, Marqueen reported earnings of $119,000 and declares cash dividends of $34,000. During that year, Marqueen acquired inventory for $60,000, which it then sold to BuyCo for $75,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $27,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed? Equity in investee income $19,052selected answer incorrect b. Equity accrual for 2021 will be increasedselected answer correct by $2,117selected answer incorrect c. If BuyCo had sold the inventory to Marqueen, would your answers above…arrow_forward
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