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Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2018 (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2014, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $35.50 per share. Michael Company Aaron Company 12/31/18 12/31/18 Revenues $ (725,500) $ (478,500) Cost of goods sold 327,750 194,250 Anortization expense 137,700 119,000 Dividend income (5,000) Net income $ (265,050) $ (165,250) Retained earnings, 1/1/18 $(1,048,000) $ (819,000) Net income (above) (265,050) (165,250) Dividends declared 90,000 5,000 Retained earnings, 12/31/18 $(1,223, 050) $ (979, 250) Cash 167,000 $ 20,600 Receivables 402,000 291,000 Inventory 633,000 342,00 Investment in Aaron Company 710,000 Copyrights 522,800 419,800 Royalty agreements 999,000 419,000 Total assets $ 3,433,000 $ 1,491,600 Liabilities $(1,109,950) $ (382,350) Preferred stock (300,000) Common stock (500,000) (100,000) Additional paid-in capital (380,000) (30,000) Retained earnings, 12/31/18 (1,223,050) (979, 250) Total liabilities and equity $(3,433,000) $(1,491,680) On the date of acquisition, Aaron reported retained earnings of $470,000 and a total book value of $600,000. At that time, its royalty agreements were undervalued by $60,000. This intangible was assumed to have a six-year remaining life with no residual value. Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books. Aaron declared and paid dividends in the same period. a. Using the preceding information, prepare a consolidation worksheet for these two companies as of December 31, 20- b. Assuming that Michael applied the equity method to this investment, what account balances would differ on the pare financial statements? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Assuming that Michael applied the equity method to this investment, what account balances would differ on the parent's individual financial statements? Equity in Earnings of Aaron Retained Earnings, 1/1/18 Investment in Aaron $ 150,250 $ 1,337,000 $ 144,250 ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,400,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000 was recognized and is being amortized at the rate of $16,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $600,000 at the acquisition date. The 2018 financial statements are as follows: ProForm ClipRite Sales $ (910,000) $ (820,000) Cost of goods sold 590,000 455,000 Operating expenses 210,000 155, 280 Dividend income (63,000) @ Net income $ (173,600) $ (210,000) Retained earnings, 1/1/18 $(2,000,000) $ (960,000) Net income (173,000) (210,880) Dividends declared 210,000 90,000 Retained earnings, 12/31/18 $(1,963,000) $(1,680,000) Cash and receivables 510,000 $ 410,000 Inventory 400,000 810,000 Investment in ClipRite 1,400,000 Fixed assets 1,000,000 1,150,000 Accumulated depreciation (200,000) (300,000) Totals $ 3,110,000 $ 2,070,000 Liabilities $ (647,000) $ (490,000) Common stock (500,000) (500,000) Retained earnings, 12/31/18 (1,963,000) (1,080,000) Totals $(3,110,000) $(2,070,000) $ ProForm sold ClipRite Inventory costing $80,000 during the last six months of 2017 for $200,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $255,000 during 2018 for $360,000. At year-end, 10 percent is left. Determine the consolidated balances for the following accounts: Retu Fixed assets Accumulated depreciation Totals Liabilities Connon stock Retained earnings, 12/31/18 Totals 1,800,000 (200,000) $ 3,110,000 $ (647,000) (500,000) (1,963,000) $(3,110,000) 1,150,000 (300,000) $ 2,070,000 $ (490,080) (500,000) (1,680,000) $12,070,880) ProForm sold ClipRite inventory costing $80,000 during the last six months of 2017 for $200,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $255,000 during 2018 for $360,000. At year-end, 10 percent is left. Determine the consolidated balances for the following accounts: Answer is complete but not entirely correct. Consolidated Balance Sales $ 1,370,000 Cost of goods sold $ 659,500 Operating expenses $ 381,000 Dividend income $ 0 Net income attributable to noncontrolling $ interest 58,200 Inventory $ 1,199,500 Noncontrolling interest in subsidiary, 12/31/18 $ 56,789