Reference no: EM133159434
Question - Haynes, Inc., obtained 100 percent of Turner Company's common stock on January 1, 2020, by issuing 10,500 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 $110,750. However, its equipment (with a five-year remaining life) was undervalued by $8,850 in the company's accounting records. Also, Turner had developed a customer list with an assessed value of $37,900, although no value had been recorded on Turner's books. The customer list had an estimated remaining useful life of 10 years.
The following balances come from the individual accounting records of these two companies as of December 31, 2020:
|
|
Haynes
|
Turner
|
|
Revenues
|
$(686,000)
|
$(318,000
|
|
Expenses
|
490,000
|
149,000
|
|
Investment income
|
Not given
|
0
|
|
Dividends declared
|
100,000
|
80,000
|
The following balances come from the individual accounting records of these two companies as of December 31, 2021:
|
|
Haynes
|
Turner
|
|
Revenues
|
$(799,000)
|
$(390,000)
|
|
Expenses
|
516,000
|
180,500
|
|
Investment income
|
Not given
|
0
|
|
Dividends declared
|
110,000
|
60,000
|
|
Equipment
|
571,000
|
359,000
|
Required -
1. What is the consolidated net income for the year ending December 31, 2021?
2. What is the consolidated equipment balance as of December 31, 2021?
3. Would this answer be affected by the investment method applied by the parent?