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Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several...

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.

Mergaronite Hill
Revenues $ (610,000 ) $ (250,000 )
Cost of goods sold 262,000 96,000
Depreciation expense 104,000 40,000
Investment income NA NA
Retained earnings, 1/1/18 (904,000 ) (590,000 )
Dividends declared 130,000 36,000
Current assets 204,000 690,000
Land 286,000 82,000
Buildings (net) 516,000 152,000
Equipment (net) 210,000 246,000
Liabilities (390,000 ) (310,000 )
Common stock (316,000 ) (42,000 )
Additional paid-in capital (52,000 ) (880,000 )

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 $18,600, its buildings were overvalued by $29,600, and equipment was undervalued by $61,200. The buildings had a 10-year remaining life; the equipment had a 5-year remaining life. A customer list with an appraised value of $110,000 was developed internally by Hill and was to be written off over a 20-year period.

  1. Determine the December 31, 2018, consolidated totals for the following accounts:

  2. In requirement (a), can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?

  3. If the parent uses the equity method, what consolidation entries would be used on a 2018 worksheet?

Determine the December 31, 2018, consolidated totals for the following accounts:
Totals
Revenues $860,000
Cost of goods sold $358,000
Depreciation expense $153,280
Amortization expense $5,500
Buildings $653,200
Equipment $456,000
Customer list $82,500
Common stock $316,000
Additional paid-in capital $52,000

In requirement (a), can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?
Consolidated totals Yes
o Event Account Debit Credit
1 S Common stock 42,000
Additional paid-in capital 880,000
Retained earnings 590,000
Investment in Hill 1,512,000
2 A Land 18,600
Equipment (net) 12,240
Customer list (net) 88,000
Buildings (net) need answer
Investment in Hill need answer
3 I Investment income need answer
Investment in Hill need answer
4 D Investment in Hill need answer
Dividends declared need answer
5 E Amortization expense 5,500
Depreciation expense 9,280
Buildings (net) 2,960
Equipment (net) 12,240
Customer list (net) 5,500
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