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 $30 per share. Aaron Company 12/31/18 $ (477, 89) 193,500 180,500 $ $ Revenues Cost of goods sold Amortization expense Dividend income Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash Receivables Inventory Investment in Aaron Company Copyrights Royalty agreements Total assets Liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31/18 Total liabilities and equity Michael Company 12/31/18 $ (745, 800) 337. See 132.900 (5,000) $ (279,680) (956, 800) (279, 600) ge.eeg $(1,145, 600) 171,800 459.29 614. eae 68e, eae 580,000 1,81e.eas $ 3,354,800 $(1, 108.403) (38e, eee) (5ee, eae) (38e.eee) (1,145,600) $(3,354,800) (183, eee) (651, 800) (183, eee) 5.000 (829, 800) 21,400 285. eee 357, eee 391,600 436, eee $ 1,490,400 $ (531,400) (188.209) (30,000) (829, 800) $(1,490, 400) On the date of acquisition, Aaron reported retained eamings of $360,000 and a total book value of $490.000. 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, 2018. b. Assuming that Michael applied the equity method to this investment, what account balances would differ on the parent's individual financial statements? Consolidated Totals Accounts Revenues Cost of goods sold Amortization expense Dividend income Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Michael Aaron Debit Credit (745,000) S (477,000) 337,500 193,500 132.900 100,500 (5.000) (279,600) S (183,000) Net income (956,000) Retained earnings, 1/1 (Michael) Retained earnings, 1/1 (Aaron) Net income (above) Dividends declared Retained earnings, 12/31 $ (279.600) 90,000 (1,145,600) (651,000) (183,000) 5.000 (829,000) S S Cash S 21,400 285.000 357.000 Receivables Inventory Investment in Aaron Co. Copyrights Royalty agreements Trademark Total assets 171,000 459.000 614.000 600.000 500.000 1,010,000 0 3.354,000 391,000 438.000 S S 1.490.400 S S (531,400) Liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31 (above) Total liabilities and equity (1,108,400) (300,000) (500,000) (300.000) (1.145,600)| (3.354,000) (100.000) (30,000) (829,000) (1.490.400) S S S 0 0 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?