Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2021 (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2017, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $26.00 per share. Aaron Company 12/31/21 $ (450,000) 180,000 117,000 Revenues Cost of goods sold Amortization expense Dividend income Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Cash Receivables Inventory Investment in Aaron Company Copyrights Royalty agreements Total assets Liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity Michael Company 12/31/21 $ (637,000) 283,500 129,600 (5,000) $ (228,900) $(1,064,000) (228,900) 90,000 $(1,202,900) $ 141,000 401,000 585,000 520,000 493,000 970,000 $ 3,110,000 $ (807,100) (300,000) (500,000) (300,000) (1,202,900) $(3,110,000) $ (153,000) $ (541,000) (153,000) 5,000 $ (689,000) $ 17,000 317,000 323,000 @ 378,000 404,000 $ 1,439,000 $ (620,000) (100,000) (30,000) (689, 000) $(1,439,000) On the date of acquisition, Aaron reported retained earnings of $280,000 and a total book value of $410,000. 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, 2021. b. Assuming that Michael applied the equity method to this investment, what would the following account balances be on the parent's individual financial statements? Required Required Using the preceding information, prepare a consolidation worksheet for these two companies as of December 31, 2021. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the wonicsheet Amounts in the Debt and Credit columns should be entered as positive. Input all amounts as positive values.) Show less Consolidated Total Accounts Revenues Cost of goods sold Amortization expense Dividend income Not Income MICHAEL COMPANY AND CONSOLIDATED SUB & DIARY Consolidation Work cheat For Year Ending December 31, 2021 Consolidation Entries Michael Aaron Debit Credit $ (637.000 S (450.000 283.500 180.000 129.000 117.000 5.DOC 0 $ (228.000 3 (153.000) Retained Gaming, 1/1/21 (Michael Retained Gaming, 11/21 (Aaron Not income above Dividends declared Retained earnings, 123121 11.064. DOO 0 228 000 90.000 11.212.300) S 1541 DOC (153.000) 5.000 (689.000) $ $ $ 141.000 401,000 5.000 Cash Receivables Inventory Investment in Aaron Co. Copyrights Royalty agrements Trademark 17.000 317,000 323.000 0 378.000 520.000 492.000 S70.000 0 3.110.000 404.000 0 Total assets $ $ 1,439.000 $ Labs Preferred sock Common stock Additional paid-n captal Retained camings, 12131.21 (above) Totallis and equity (807 100) S (300.000) (500.000) (300.000 11.202 300 (3,110,000 $ (620.000 0 (100.000 130,000 (689 000) $ 11.429,000 $ Required A Required B Assuming that Michael applied the equity method to this investment, what would the following account balances be on the parent's individual financial statements? Amounts Equity in Earnings of Aaron 12/31/21 Retained earnings, 1/1/21 Investment in Aaron 12/31/21 Retained earnings, 12/31/21