Haynes, Inc., obtained 100 percent of Turner Companyâs commonstock on January 1, 2014, by issuing 9,000 shares of $10 par valuecommon stock. Haynesâs shares had a $15 per share fair value. Onthat 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 companyâs accounting records. Also, Turner haddeveloped a customer list with an assessed value of $30,000,although no value had been recorded on Turnerâs books. The customerlist had an estimated remaining useful life of 10 years. Thefollowing figures come from the individual accounting records ofthese two companies as of December 31, 2014: Haynes Turner Revenues$ (600,000 ) $ (230,000 ) Expenses 440,000 120,000 Investmentincome Not given 0 Dividends declared 80,000 50,000 The followingfigures come from the individual accounting records of these twocompanies as of December 31, 2015: Haynes Turner Revenues $(700,000 ) $ (280,000 ) Expenses 460,000 150,000 Investment incomeNot given 0 Dividends declared 90,000 40,000 Equipment 500,000300,000 a. What balance does Haynesâs Investment in Turner accountshow on December 31, 2015, when the equity method is applied? b.What is the consolidated net income for the year ending December31, 2015? c-1. What is the consolidated equipment balance as ofDecember 31, 2015? c-2. Would this answer be affected by theinvestment method applied by the parent? Yes No d. Prepare entry *Cif the parent used the equity method. (If no entry is required fora transaction/event, select "No journal entry required" in thefirst account field.)
Haynes, Inc., obtained 100 percent of Turner Companyâs commonstock on January 1, 2014, by issuing 9,000 shares of $10 par valuecommon stock. Haynesâs shares had a $15 per share fair value. Onthat 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 companyâs accounting records. Also, Turner haddeveloped a customer list with an assessed value of $30,000,although no value had been recorded on Turnerâs books. The customerlist had an estimated remaining useful life of 10 years. Thefollowing figures come from the individual accounting records ofthese two companies as of December 31, 2014: Haynes Turner Revenues$ (600,000 ) $ (230,000 ) Expenses 440,000 120,000 Investmentincome Not given 0 Dividends declared 80,000 50,000 The followingfigures come from the individual accounting records of these twocompanies as of December 31, 2015: Haynes Turner Revenues $(700,000 ) $ (280,000 ) Expenses 460,000 150,000 Investment incomeNot given 0 Dividends declared 90,000 40,000 Equipment 500,000300,000 a. What balance does Haynesâs Investment in Turner accountshow on December 31, 2015, when the equity method is applied? b.What is the consolidated net income for the year ending December31, 2015? c-1. What is the consolidated equipment balance as ofDecember 31, 2015? c-2. Would this answer be affected by theinvestment method applied by the parent? Yes No d. Prepare entry *Cif the parent used the equity method. (If no entry is required fora transaction/event, select "No journal entry required" in thefirst account field.)
Related questions
| Haynes, Inc., obtained 100 percent of Turner Companyâs common stock on January 1, 2014, by issuing 11,300 shares of $10 par value common stock. Haynesâs shares had a $15 per share fair value. On that date, Turner reported a net book value of $126,000. However, its equipment (with a five-year remaining life) was undervalued by $8,200 in the companyâs accounting records. Also, Turner had developed a customer list with an assessed value of $35,300, although no value had been recorded on Turnerâs books. The customer list had an estimated remaining useful life of 10 years. |
| The following figures come from the individual accounting records of these two companies as of December 31, 2014: |
| Haynes | Turner | |||||||||
| Revenues | $ | (648,000 | ) | $ | (360,000 | ) | ||||
| Expenses | 486,000 | 173,000 | ||||||||
| Investment income | Not given | 0 | ||||||||
| Dividends declared | 80,000 | 90,000 | ||||||||
| The following figures come from the individual accounting records of these two companies as of December 31, 2015: |
| Haynes | Turner | |||||||||
| Revenues | $ | (845,000 | ) | $ | (412,750 | ) | ||||
| Expenses | 515,800 | 207,200 | ||||||||
| Investment income | Not given | 0 | ||||||||
| Dividends declared | 90,000 | 80,000 | ||||||||
| Equipment | 512,000 | 367,000 | ||||||||
| a. | What balance does Haynesâs Investment in Turner account show on December 31, 2015, when the equity method is applied? |
| b. | What is the consolidated net income for the year ending December 31, 2015? |
| c-1. | What is the consolidated equipment balance as of December 31, 2015? |
| c-2. | Would this answer be affected by the investment method applied by the parent? | ||||
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| d. | Prepare entry *C for each of the following methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
1. Prepare entry *C if the parent used the initial value method.
December 31, 2015
2. Prepare entry *C if the parent used the partial equity method.
December 31, 2015
3. Prepare entry *C if the parent used the equity method.
December 31, 2015
