Reference no: EM132486218

Haynes, Inc., obtained 100 percent of Turner Company's common stock on January 1, 2017, by issuing 11,100 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 $128,150. However, its equipment (with a five-year remaining life) was undervalued by $5,950 in the company's accounting records. Also, Turner had developed a customer list with an assessed value of $32,400, 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, 2017:

                                        Haynes                      Turner

Revenues                    $(713,000)          $(327,000)

Expenses                         535,000             139,000

Investment income                Not given             0

Dividends declared                90,000              90,000

The following balances come from the individual accounting records of these two companies as of December 31, 2018:

                                  Haynes                    Turner

Revenues              $(869,000)             $(381,000)

Expenses                  564,400                 177,600

Investment income       Not given                      0

Dividends declared 110,000                            80,000

Equipment                597,000                     371,000

Question 1: What balance does Haynes's Investment in Turner account show on December 31, 2018, when the equity method is applied?

Question 2: What is the consolidated net income for the year ending December 31, 2018?

Question 3: What is the consolidated equipment balance as of December 31, 2018?

Question 4: Would this answer be affected by the investment method applied by the parent?

Question 5: Prepare entry for the beginning of the Retained Earnings account (Part 3-4) on December 31, 2018 by using initial value, partial equity and equity method.