Question
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2018: GibsonDavisSales$(821,000)$(422,000)Cost of goods sold382,000211,000Operating expenses262,00066,000Dividend income(24,000)0Net income$(201,000)$(145,000)Retained earnings,
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2018:
GibsonDavisSales$(821,000)$(422,000)Cost of goods sold382,000211,000Operating expenses262,00066,000Dividend income(24,000)0Net income$(201,000)$(145,000)Retained earnings, 1/1/18$(774,000)$(485,000)Net income(201,000)(145,000)Dividends declared50,00040,000Retained earnings, 12/31/18$(925,000)$(590,000)Cash and receivables$258,650$171,000Inventory540,000235,000Investment in Davis595,3500Buildings (net)547,000661,000Equipment (net)444,000432,000Total assets$2,385,000$1,499,000Liabilities$(830,000)$(569,000)Common stock(630,000)(340,000)Retained earnings, 12/31/18(925,000)(590,000)Total liabilities and stockholders' equity$(2,385,000)$(1,499,000)
Gibson acquired 60 percent of Davis on April 1, 2018, for $595,350. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $39,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $396,900. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2018.
- Generate 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
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