The following are selected accounts and balances for Mergaronite Company and Hill, Inc., as of December 31, 2021. Several of Mergaronite’s accounts have omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period. Mergaronite Hill Revenues $-600,000 $-250,000 Cost of Goods Sold 280, 000 100,000 Depreciation expense 120,000 50,000 Investment income Not Given N/A Retained earnings, 1/1/21 -900,000 -600,000 Dividends declared 130,000 40,000 Current assets 200,000 690,000 Land 300,000 90,000 Buildings (Net) 500,000 140,000 Equipment (Net) 200,000 250,000 Liabilities -400,000 -310,000 Common Stock -300,000 -40,000 Additional paid-in capital -50,000 -160,000 Assume that Mergaronite acquired Hill on January 1, 2017, by issuing 7,000 shares of common stock having a par value of $10 per share but a fair value of $100 each. On January 1, 2017, Hills’ land was undervalued by $20,000, its buildings were overvalued by $30,000, and equipment was undervalued by $60,000. The buildings had a 10-year remaining life; the equipment had a 5-year remaining life. A customer list with an appraised value of $100,00 was developed internally by Hill and was estimated to have a 20-year remaining useful life. Determine the December 31, 2001 consolidated totals for the accounts given. In requirement (a), can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary? If the parent uses the equity method, what consolidation entries would be used on a 2021 worksheet? Determine the December 31, 2021, consolidated totals for the following accounts: (In put all amounts as positive values) Using: Revenues 85,000 Cost of goods sold 380,000 Depreciation expense 170,000 Amortization expense 5,000 Buildings 640,000 Equipment 450,000 Customer List 100,000 Common Stock 300,000 Additional paid-in capital
The following are selected accounts and balances for Mergaronite Company and Hill, Inc., as of December 31, 2021. Several of Mergaronite’s accounts have omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period.
Mergaronite Hill
Revenues $-600,000 $-250,000
Cost of Goods Sold 280, 000 100,000
Investment income Not Given N/A
Dividends declared 130,000 40,000
Current assets 200,000 690,000
Land 300,000 90,000
Buildings (Net) 500,000 140,000
Equipment (Net) 200,000 250,000
Liabilities -400,000 -310,000
Common Stock -300,000 -40,000
Additional paid-in capital -50,000 -160,000
Assume that Mergaronite acquired Hill on January 1, 2017, by issuing 7,000 shares of common stock having a par value of $10 per share but a fair value of $100 each. On January 1, 2017, Hills’ land was undervalued by $20,000, its buildings were overvalued by $30,000, and equipment was undervalued by $60,000. The buildings had a 10-year remaining life; the equipment had a 5-year remaining life. A customer list with an appraised value of $100,00 was developed internally by Hill and was estimated to have a 20-year remaining useful life.
- Determine the December 31, 2001 consolidated totals for the accounts given.
- In requirement (a), can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?
- If the parent uses the equity method, what consolidation entries would be used on a 2021 worksheet?
- Determine the December 31, 2021, consolidated totals for the following accounts: (In put all amounts as positive values)
Using:
Revenues 85,000
Cost of goods sold 380,000
Depreciation expense 170,000
Amortization expense 5,000
Buildings 640,000
Equipment 450,000
Customer List 100,000
Common Stock 300,000
Additional paid-in capital
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