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 | | $ | (584,000 | ) | | $ | (248,000 | ) |
| Cost of goods sold | | | 298,000 | | | | 112,000 | |
| Depreciation expense | | | 106,000 | | | | 58,000 | |
| Investment income | | | NA | | | | NA | |
| Retained earnings, 1/1/18 | | | (896,000 | ) | | | (590,000 | ) |
| Dividends declared | | | 134,000 | | | | 44,000 | |
| Current assets | | | 210,000 | | | | 676,000 | |
| Land | | | 316,000 | | | | 84,000 | |
| Buildings (net) | | | 510,000 | | | | 128,000 | |
| Equipment (net) | | | 208,000 | | | | 256,000 | |
| Liabilities | | | (412,000 | ) | | | (320,000 | ) |
| Common stock | | | (288,000 | ) | | | (44,000 | ) |
| Additional paid-in capital | | | (46,000 | ) | | | (938,000 | ) |
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Assume that Mergaronite took over Hill on January 1, 2014, byissuing 7,200 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 $19,200, its buildings were overvalued by$30,800, and equipment was undervalued by $58,200. The buildingshad a 10-year remaining life; the equipment had a 5-year remaininglife. A customer list with an appraised value of $104,000 wasdeveloped internally by Hill and was to be written off over a20-year period.
Determine the December 31, 2018, consolidated totals for thefollowing accounts:
In requirement (a), can the consolidated totals be determinedwithout knowing which method the parent used to account for thesubsidiary?
If the parent uses the equity method, what consolidation entrieswould be used on a 2018 worksheet?
