3. Following are financial statements for Moore Company and Kirby Company for 2015.

Moore Kirby Sales (720,000) (540,000) Cost of goods sold 450,000 360,000 Operating and interest expense 90,000 138,000 Net income (180,000) (42,000)

Retained earnings, 1/1/15 (891,000) (495,000) Net income (180,000) (42,000) Dividends paid 117,000 6,000 Retained earnings, 12/31/15 (954,000) (531,000) Cash and receivables 195,300 162,000 Inventory 201,600 144,000 Investment in Kirby 591,300 - Equipment (net) 540,000 378,000 Buildings 900,000 585,000 Accumulated depreciation-buildings (90,000) (180,000) other assets 180,000 90,000 Total assets 2,518,200 1,179,000 Liabilities (1,024,200) (513,000) common stock (180,000) (36,000) Additional paid-in capital (360,000) (99,000) Retained earnings, 12/31/15 (954,000) (531,000) Total liabilities and equity (2,518,200) (1,179,000)

Moore purchased 90% of Kirby on January 1, 2014, for $585,000 in cash. On that date, the 10% noncontrolling interest was assessed to have a $65,000 fair value. As of January 1, 2014, Kirby had common stock $36,000, additional paid-in capital 99,000, and retained earnings $423,000. Also at the acquisition date, Kirby held equipment (4-year remaining life) whose fair value is higher than the book value by $18,000, and an interest-bearing liability (5-year remaining life) whose fair value is lower than book value by $36,000. The rest of the excess fair value was assigned to goodwill.

Moore uses the initial value method to account for the investment in Kirby.

During 2014, Kirby earned a net income of $72,000 and paid no dividends.

Each year, Kirby sells inventory to Moore with a gross profit rate of 20%. Intra-entity sales were $144,000 in 2014 and $180,000 in 2015. On December 31, 2014, 30% of the 2014 transfers were still on hand and, on December 31, 2015, 40% of the 2015 transfers remained.

Moore sold a building to Kirby on January 2, 2014. It had originally cost Moore $100,000 but had $86,000 in accumulated depreciation at the time of this transfer. The sale price was $26,000 in cash. At that time, the building has a five-year remaining life.

Required: Prepare consolidation entries for December 31, 2015