1. Award: 100.00 points Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2018: Gibson Davis Sales $ (798,000 ) $ (418,500 ) Cost of goods sold 303,000 206,000 Operating expenses 273,000 62,500 Dividend income (18,000 ) 0 Net income $ (240,000 ) $ (150,000 ) Retained earnings, 1/1/18 $ (797,000 ) $ (457,000 ) Net income (240,000 ) (150,000 ) Dividends declared 60,000 30,000 Retained earnings, 12/31/18 $ (977,000 ) $ (577,000 ) Cash and receivables $ 254,500 $ 168,000 Inventory 591,000 272,000 Investment in Davis 586,500 0 Buildings (net) 569,000 605,000 Equipment (net) 486,000 408,000 Total assets $ 2,487,000 $ 1,453,000 Liabilities $ (880,000 ) $ (536,000 ) Common stock (630,000 ) (340,000 ) Retained earnings, 12/31/18 (977,000 ) (577,000 ) Total liabilities and stockholders' equity $ (2,487,000 ) $ (1,453,000 ) Gibson acquired 60 percent of Davis on April 1, 2018, for $586,500. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $69,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $391,000. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2018. Prepare a consolidated income statement for the year ending December 31, 2018. Determine the consolidated balance for each of the following accounts as of December 31, 2018: Goodwill Equipment (net) Common stock Buildings (net) Dividends declared References Financial StatementsLearning Objective: 04-01 Understand that business combinations can occur with less than complete ownership.Learning Objective: 04-08 Understand the impact on consolidated financial statements of a midyear acquisition. Difficulty: 3 HardLearning Objective: 04-04 Demonstrate the computation and allocation of consolidated net income in the presence of a noncontrolling interest.