Chapter 3, Problem 35P

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.…

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:…

Haynes, 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…

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:…

ALPHA CORP. bought 40% of BETA INC.'s outstanding ordinary shares on January 2, 2015, for P4,000,000. The carrying amount of BETA’s net assets at the purchase date totaled P9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventories, for which fair values exceeded their carrying amounts by P900,000 and P100,000, respectively. The plant has an 18-year life. All inventories were sold during 2015. During 2015, BETA reported profit of P1,200,000 and paid a P200,000 cash dividend. What amount should ALPHA report in its statement of comprehensive income from its investment in BETA for the year ended December 31, 2015?

Problems 10, 11, and 12 relate to the following:On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.Selected account balances from the two companies’ individual records were as follows:On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list? a. $10,000b. $20,000c. $25,000d. $50,000

Problems 10, 11, and 12 relate to the following:On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.Selected account balances from the two companies’ individual records were as follows:What is consolidated net income for Phoenix and Sedona for 2018?a. $148,000b. $203,000c. $228,000d. $238,000

On January 1, 2017, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.9 million and $700,000, respectively. A customer list compiled by Q-Video had an appraised value of $300,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $250,000 in 2017 and a net loss of $100,000 in 2018. In each of these two years, Q-Video declared and paid a cash dividend of $15,000 to its stockholders. During 2017, Q-Video sold inventory that had an original cost of $100,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2017, and the remainder…

On January 1, 2017, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.9 million and $700,000, respectively. A customer list compiled by Q-Video had an appraised value of $300,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill.Q-Video generated net income of $250,000 in 2017 and a net loss of $100,000 in 2018. In each of these two years, Q-Video declared and paid a cash dividend of $15,000 to its stockholders.During 2017, Q-Video sold inventory that had an original cost of $100,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2017, and the remainder was…