Haynes, Inc., obtained 100 percent of Turner Company’s common
stock on January 1, 2014, by issuing 10,800 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 $119,550. However,
its equipment (with a five-year remaining life) was undervalued by
$8,150 in the company’s accounting records. Also, Turner had
developed a customer list with an assessed value of $34,300,
although no value had been recorded on Turner’s books. The customer
list had an estimated remaining useful life of 10 years.

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Question: Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2014, by issuin…
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    The following figures come from the
individual accounting records of these two companies as of December
31, 2014:

Haynes Turner
  Revenues $ (698,000 ) $ (340,000 )
  Expenses 482,000 201,000
  Investment income Not given 0
  Dividends declared 110,000 60,000

    The following figures come from the
individual accounting records of these two companies as of December
31, 2015:

Haynes Turner
  Revenues $ (873,000 ) $ (400,250 )
  Expenses 511,100 239,300
  Investment income Not given 0
  Dividends declared 130,000 40,000
  Equipment 570,000 323,000

a.

What balance does Haynes’s 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?

Yes
No

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.)

           

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