Mergaronite Hill $(600,000) 280,000 $(250,000) 100,000 50,000 Revenues... Cost of goods sold Depreciation expense Investment income. Retained earnings, 1/1/18. Dividends declared. Current assets.. Land...... Buildings (net) Equipment (net) 120,000 Not given (900,000) 130,000 200,000 300,000 500,000 NA (600,000) 40,000 690,000 90,000 140,000 250,000 200,000 Liabilities.. (400,000) (300,000) (50,000) (310,000) (40,000) (160,000) Common stock Additional paid-in capital.
Mergaronite Hill $(600,000) 280,000 $(250,000) 100,000 50,000 Revenues... Cost of goods sold Depreciation expense Investment income. Retained earnings, 1/1/18. Dividends declared. Current assets.. Land...... Buildings (net) Equipment (net) 120,000 Not given (900,000) 130,000 200,000 300,000 500,000 NA (600,000) 40,000 690,000 90,000 140,000 250,000 200,000 Liabilities.. (400,000) (300,000) (50,000) (310,000) (40,000) (160,000) Common stock Additional paid-in capital.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.4.13P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...
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Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period.
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, Hill’s 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.
a. Determine and explain the December 31, 2018, consolidated totals for the following accounts:
Revenues
Amortization Expense
Customer List
Cost of Goods Sold
Buildings
Common Stock
Equipment
Additional Paid-In Capital
b. In requirement (a), why can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?
c. If the parent uses the equity method, what consolidation entries would be used on a 2018 worksheet?
Transcribed Image Text:Mergaronite
Hill
$(600,000)
280,000
$(250,000)
100,000
50,000
Revenues...
Cost of goods sold
Depreciation expense
Investment income.
Retained earnings, 1/1/18.
Dividends declared.
Current assets..
Land......
Buildings (net)
Equipment (net)
120,000
Not given
(900,000)
130,000
200,000
300,000
500,000
NA
(600,000)
40,000
690,000
90,000
140,000
250,000
200,000
Liabilities..
(400,000)
(300,000)
(50,000)
(310,000)
(40,000)
(160,000)
Common stock
Additional paid-in capital.
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