Answer
(A). Workings to determine the consolidated totals as on December 31 2018
Revenues
Particulars | Amount |
Revenues of Mergaronite | $ 6,00,000 |
Revenues of Hill | $2,50,000 |
Total | $8,50,000 |
Amortization Expense
Particulars | Amount |
Amortization Expense for 2018 ($ 100,000/20 = $ 5,000) | $5,000 |
Total | $5,000 |
Building
Particulars | Amount |
Building of Mergaronite | $5,00,000 |
Building of Hill | $1,40,000 |
Over Valuation of Building | $30,000 |
Total | $6,70,000 |
Depreciation Expense
Particulars | Amount |
Depreciation Expense of Mergaronite | $1,20,000 |
Depreciation Expense of Hill | $50,000 |
Depreciation on the over Valuation of Building | $3,000 |
Depreciation on undervalued Equuipment | $12,000 |
Total | $1,85,000 |
Additional paid in capital
Particular | Amount |
Additional paid in capital of Mergaronite | $50,000 |
Total | $50,000 |
Note: Here we consider the additional paid in capital of parent company only. Because the Mergaronite tool over hill by issuing additional paid in capital in Mergaronite company.
Patent
Particulars | Amount |
Patent value as on 2014 | $1,00,000 |
Less : Amortization 2018 | $5,000 |
Less : Amortization for 4 years | $20,000 |
Total | $75,000 |
Customer list development by Hill Inc, is consider as patent each year Amortization expense is ($100,000 /20) Amortization expense for ( 2014 , 2015,2016,2017) Value of customer list as on 31st December 2018.
Cost of Goods sold
Particulars | Amount |
Cost of Goods sold of Mergaronite | $2,80,000 |
Cost of Goods sold of Hill | $1,00,000 |
Total | $3,80,000 |
Common Stock
Particulars | Amount |
Common Stock of Mergaronite | $3,00,000 |
Total | $3,00,000 |
Note: Here we consider the common stock of parent company only. Because the Mergaronite took over hill by issuing common stock in Mergaronite company.
Equipment
Particulars | Amount |
Equipment of Mergaronite | $2,00,000 |
Equipment of Hill | $2,50,000 |
Total | $4,50,000 |
Equipment that was undervalued by $60,000 need not do any adjustment. Equipment was undervalued on January 2014 and by the end of 2018 the 5 years period is completed
(B). Here we are not dealing with the parent's company investment account and there are no relprocity entries required to be posted. No adjustment are to be made on earnings on equity and dividends. Hence the method used by the parent company does not matters.
(C). Consolidation entries if parent company is using equity method
Elimination entry passed to Eliminate investment A/C in Subsidiary
Particulars | Amount | Amount |
Retained Earnings A/C | $6,00,000 | |
Common Stock | $40,000 | |
Additional Paid in capital | $1,60,000 | |
To Investment | $8,00,000 | |
Land | $20,000 | |
Equipment | $12,000 | |
Customer list | $80,000 | |
To Building net A/C | $18,000 | |
To Investment in HIll A/C | $94,000 | |
Investment in Hill | $40,000 | |
To Dividend Paid | $40,000 | |
Depreciation A/c | $12,000 | |
Amortization A/c | $5,000 | |
Building | $3,000 | |
To Equipment A/c | $12,000 | |
To Customer A/c | $5,000 | |
2. Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2018. Several of Mer...
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 $(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...
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 $(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...
The following are selected accounts and balances for Mergaronite Company and Hill, Inc., as of December 31, 2021. Several of Mergaronite's accounts have been omitted. Credit balances are indicated by parentheses. Dividends were declared and paid in the same period. Revenues Cost of goods sold Depreciation expense Investment income Retained earnings, 1/1/21 Dividends declared Current assets Land Buildings (net) Equipment (net) Liabilities Common stock Additional paid-in capital Mergaranite Hill $ (620, eee) $ (254,000) 282,000 114,000 114, eee 60, eee...
210000 75000 1102500 942500 Following are selected accounts for Green Corporation and Vega Company as of December 31, 2023. Several of Green's accounts have been omitted. $ Vega 500,000 200,000 40,000 60,000 Revenues Cost of goods sold Depreciation expense other expenses Equity in Vega's income Retained earnings, 1/1/2023 Dividends Current assets Land Building (net) Equipment (net) Liabilities Common stock Additional paid-in capital Green $ 900,000 360,000 140,000 100,000 ? 1,350,000 195,000 300,000 450,000 750,000 300,000 600,000 450.000 75,000 1,200,000 80,000...
Following are selected balance sheet accounts of Despacito Corp. at December 31, 2018 and 2017, and the increases or decreases in each account from 2017 to 2018. Also presented is selected income statement information for the year ended December 31, 2018, and additional information. Increase Selected balance sheet accounts 2018 2017 (Decrease) Assets: Accounts receivable $100,000 $ 94,000 6,000 Inventory 55,000 70,000 (15,000) Prepaid Expenses 30,000 25,000 5,000 Property, plant, and equipment 400,000 200,000 200,000 Accumulated depreciation (200,000) (180,000) 20,000 Deferred tax asset 30,000 40,000 (10,000) Liabilities and stockholders’ equity: Accounts payable 400,000 420,000 (20,000) Interest payable 8,000 6,000 2,000 Accrued expenses payable 10,000 7,000 3,000...
Following are selected balance sheet accounts of Despacito Corp. at December 31, 2018 and 2017, and the increases or decreases in each account from 2017 to 2018. Also presented is selected income statement information for the year ended December 31, 2018, and additional information. Selected balance sheet accounts 2018 2017 (Decrease) Assets: Accounts receivable $100,000 $ 94,000 6,000 Inventory 55,000 70,000 (15,000) Prepaid Expenses 30,000 25,000 5,000 Property, plant, and equipment 400,000 200,000 200,000...
Daniels Company reports the following year-end account balances at December 31, 2017. Accounts payable …………….. $20,000 Inventory …………………… $40,000 Accounts receivable ………….. $40,000 Land ………………………... $100,000 Bonds payable, long-term …… $250,000 Goodwill ……………………. $10,000 Buildings ……………………….. $160,000 Retained earnings ………… $115,000 Cash ……………………………. $50,000 Sales revenue ……………... $500,000 Common stock ………………… $100,000 Supplies inventory ………… $5,000 Cost of goods sold ……………. $200,000 Supplies expense …………. $20,000 Equipment ……………………... $80,000 Wages expense …………… $100,000 What is Daniels Company’s net income for...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation Account Title Cash Accounts receivable Inventories Interest payable Marketable securities Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Copyright (net of amortization) Prepaid expenses (next 12 months) Accounts payable Deferred revenues (next 12 months) Notes payable Allowance for uncollectible accounts Common stock Retained earnings Totals Debits Credits 45,000 96,000 121,000 30,000 84,000 160,000 400,000 120,000 115,000 45,000 32,000 52,000 85,000 40,000 350,000 7,000 400,000...
Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 30 percent of this subsidiary's convertible bonds. The following consolidated financial statements are for 2017 and 2018 2017 (850,000 600,000 90,000 Revenues Cost of goods sold Depreciation and amortization Gain on sale of building Interest expense Consolidated net income to noncontrolling interest to parent company Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory Buildings and equipment (net) Databases Total assets Accounts...
Following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2018 Penske $ (796, 000) Stanza $632,000) Revenues Cost of goods sold Depreciation expense Investment income Dividends declared Retained earnings, 1/1/18 Current assets Copyrights Royalty agreements Investment in Stanza Liabilities Common stock Additional paid-in capital 284,100 153,000 158,000 258,000 Not given 80,000 (606, 000) 408,000 974,000 646,000 60,000 (362,000) 612,000 519,00 1,004,000 Not given (570,000) (1,337,000) (600,000) ($20 par) (200,000) ($10 par) (150,000) (80,000) Note:...