Problem 1-21 (LO 1-1, 1-2, 1-3, 1-4, 1-5a) On January 1, 2016, Halstead, Inc., p

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Problem 1-21 (LO 1-1, 1-2, 1-3, 1-4, 1-5a) On January 1, 2016, Halstead, Inc., purchased 75,000 shares of Sedgwick Company common stock for $1,521,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years Dividends are declared and paid in the same period 2816 2017 2018 $364,88e 486,088 688,808 $100,000 134,000 163,000 On July 1.2018, Halstead sells 14,000 shares of this investment for $25 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence Determine the amounts that would appear on Halstead's 2018 income statement relating to its ownership and partial sale of its investment in Sedgwick's common stock As total income accrual (no unearned gains) on sale of shares

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Part 1

Note 1

Particulars Amount Equity Method Income Accruals 25% of $608000 for Half Year ($608000*25%/2) $76000 21% of $608000 for Half year ($608000*21%/2) $63840 Total Income Accruals $139840 Gain on sale (Note 1) $26950 Total Income Statement Effect $166790

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