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  3. mergaronite hill revenues $(600,000) $(25

Mergaronite Hill Revenues $(600,000) $(250,000) ...

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Accounting

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 NA
Retained earnings, 1/1/18 (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)

page 144

Assume that Mergaronite took over Hill on January 1, 2014, 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, 2014, 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 $100,000 was developed internally by Hill and was to be written off over a 20-year period.

  2. the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?

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