Question
Haynes, Inc., obtained 100 percent of Turner Companys common stock on January 1, 2014, by issuing 8,500 shares of $10 par value common stock. Hayness
Haynes, Inc., obtained 100 percent of Turner Companys common stock on January 1, 2014, by issuing 8,500 shares of $10 par value common stock. Hayness shares had a $15 per share fair value. On that date, Turner reported a net book value of $88,750. However, its equipment (with a five-year remaining life) was undervalued by $7,250 in the companys accounting records. Also, Turner had developed a customer list with an assessed value of $31,500, although no value had been recorded on Turners 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 | $ | (692,000 | ) | $ | (275,000 | ) | ||||
Expenses | 449,000 | 130,000 | ||||||||
Investment income | Not given | 0 | ||||||||
Dividends declared | 120,000 | 70,000 | ||||||||
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The following figures come from the individual accounting records of these two companies as of December 31, 2015: |
Haynes | Turner | |||||||||
Revenues | $ | (886,000 | ) | $ | (348,750 | ) | ||||
Expenses | 471,200 | 163,100 | ||||||||
Investment income | Not given | 0 | ||||||||
Dividends declared | 140,000 | 50,000 | ||||||||
Equipment | 532,000 | 373,000 | ||||||||
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a. | What balance does Hayness 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? |
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