Following are selected accounts for Mergaronite Company andHill, Inc., as of December 31, 2018....

90.2K

Verified Solution

Question

Accounting

Following are selected accounts for Mergaronite Company andHill, Inc., as of December 31, 2018. Several of Mergaronite’saccounts have been omitted. Credit balances are indicated byparentheses. Dividends were declared and paid in the sameperiod.
Mergaronite Hill
Revenues $ (602,000 ) $ (240,000 )
Cost of goods sold 260,000 114,000
Depreciation expense 120,000 44,000
Investment income NA NA
Retained earnings, 1/1/18 (892,000 ) (602,000 )
Dividends declared 120,000 44,000
Current assets 200,000 662,000
Land 318,000 94,000
Buildings (net) 500,000 140,000
Equipment (net) 194,000 248,000
Liabilities (390,000 ) (320,000 )
Common stock (294,000 ) (36,000 )
Additional paid-in capital (54,000 ) (908,000 )
Assume that Mergaronite took over Hill on January 1, 2014, byissuing 7,600 shares of common stock having a par value of $10 pershare but a fair value of $100 each. On January 1, 2014, Hill’sland was undervalued by $19,800, its buildings were overvalued by$29,200, and equipment was undervalued by $61,800. The buildingshad a 10-year remaining life; the equipment had a 5-year remaininglife. A customer list with an appraised value of $94,000 wasdeveloped internally by Hill and was to be written off over a20-year period.
A.) Determine the December 31, 2018, consolidatedtotals for the following accounts:
Totals
Revenues $
Cost of goods sold $
Depreciation expense $
Amortization expense $
Buildings $
Equipment $
Customer list $
Common stock $
Additional paid-in capital $
B.) In requirement (a), can the consolidated totalsbe determined without knowing which method the parent used toaccount for the subsidiary?
Consolidated totals
C.) If the parent uses the equity method, whatconsolidation entries would be used on a 2018worksheet?
Prepare Entry S to eliminate the beginning stockholders' equityof the subsidiary.
Event Account Debit Credit
S
Prepare Entry A to recognize the unamortized allocation balancesas of the beginning of the current year.
Event Account Debit Credit
A
Prepare Entry I to remove the equity income recognized duringthe year - equity method.
Event Account Debit Credit
I
Prepare Entry D to remove the Intra-entity dividenddeclarations.
Event Account Debit Credit
D
Prepare Entry E to recognize the excess acquisition-datefair-value amortizations for the period.
Event Account Debit Credit
E

Answer & Explanation Solved by verified expert

3.5 Ratings (623 Votes)

A Determine the December 31 2018 consolidated totals for the following accounts Particulars Amount Exaplanation Revenue 842000 602000 240000 add Parent and subsidiary revenues Cost of Goods Sold 374000 260000 114000 add Parent and subsidiary COGS Depreciation Expense 173440 120000 44000 2920 12360 Amotization Expense 4700 94000 20 Building Net 625400 500000 140000 29200 2920 5year Since building is overvalued 29200 to be added and its depreciation for last 5 years to be deducted to See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingFollowing are selected accounts for Mergaronite Company andHill, Inc., as of December 31, 2018. Several...Following are selected accounts for Mergaronite Company andHill, Inc., as of December 31, 2018. Several of Mergaronite’saccounts have been omitted. Credit balances are indicated byparentheses. Dividends were declared and paid in the sameperiod.MergaroniteHillRevenues$(602,000)$(240,000)Cost of goods sold260,000114,000Depreciation expense120,00044,000Investment incomeNANARetained earnings, 1/1/18(892,000)(602,000)Dividends declared120,00044,000Current assets200,000662,000Land318,00094,000Buildings (net)500,000140,000Equipment (net)194,000248,000Liabilities(390,000)(320,000)Common stock(294,000)(36,000)Additional paid-in capital(54,000)(908,000)Assume that Mergaronite took over Hill on January 1, 2014, byissuing 7,600 shares of common stock having a par value of $10 pershare but a fair value of $100 each. On January 1, 2014, Hill’sland was undervalued by $19,800, its buildings were overvalued by$29,200, and equipment was undervalued by $61,800. The buildingshad a 10-year remaining life; the equipment had a 5-year remaininglife. A customer list with an appraised value of $94,000 wasdeveloped internally by Hill and was to be written off over a20-year period.A.) Determine the December 31, 2018, consolidatedtotals for the following accounts:TotalsRevenues$Cost of goods sold$Depreciation expense$Amortization expense$Buildings$Equipment$Customer list$Common stock$Additional paid-in capital$B.) In requirement (a), can the consolidated totalsbe determined without knowing which method the parent used toaccount for the subsidiary?Consolidated totalsC.) If the parent uses the equity method, whatconsolidation entries would be used on a 2018worksheet?Prepare Entry S to eliminate the beginning stockholders' equityof the subsidiary.EventAccountDebitCreditSPrepare Entry A to recognize the unamortized allocation balancesas of the beginning of the current year.EventAccountDebitCreditAPrepare Entry I to remove the equity income recognized duringthe year - equity method.EventAccountDebitCreditIPrepare Entry D to remove the Intra-entity dividenddeclarations.EventAccountDebitCreditDPrepare Entry E to recognize the excess acquisition-datefair-value amortizations for the period.EventAccountDebitCreditE

	Mergaronite			Hill
Revenues	$	(602,000	)	$	(240,000	)
Cost of goods sold		260,000			114,000
Depreciation expense		120,000			44,000
Investment income		NA			NA
Retained earnings, 1/1/18		(892,000	)		(602,000	)
Dividends declared		120,000			44,000
Current assets		200,000			662,000
Land		318,000			94,000
Buildings (net)		500,000			140,000
Equipment (net)		194,000			248,000
Liabilities		(390,000	)		(320,000	)
Common stock		(294,000	)		(36,000	)
Additional paid-in capital		(54,000	)		(908,000	)