Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1

Question

Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2014, by issuing 11,300 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 $126,000. However, its equipment (with a five-year remaining life) was undervalued by $8,200 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $35,300, although no value had been recorded on Turner’s 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 Haynes’s Investment in Turner account show on December 31, 2015, when the equity method is applied?

What is the consolidated net income for the year ending December 31, 2015?

What is the consolidated equipment balance as of December 31, 2015?

Would this answer be affected by the investment method applied by the parent?

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.)

b.

What is the consolidated net income for the year ending December 31, 2015?

-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?

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.)

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.) select "No journal entry required" in the first account f Date Consolidating Entries Debit Credit (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

Explanation / Answer

consolidated net income = net income of holding + share of holding in subsisary

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