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Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021: Gibson Davis Sales $ (758,000 ) $ (381,500

Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021:

Gibson Davis
Sales $ (758,000 ) $ (381,500 )
Cost of goods sold 372,000 148,000
Operating expenses 252,000 63,500
Dividend income (18,000 ) 0
Net income $ (152,000 ) $ (170,000 )
Retained earnings, 1/1/21 $ (708,000 ) $ (447,000 )
Net income (152,000 ) (170,000 )
Dividends declared 80,000 30,000
Retained earnings, 12/31/21 $ (780,000 ) $ (587,000 )
Cash and receivables $ 42,300 $ 70,000
Inventory 568,000 225,000
Investment in Davis 566,700 0
Buildings (net) 596,000 690,000
Equipment (net) 483,000 456,000
Total assets $ 2,256,000 $ 1,441,000
Liabilities $ (846,000 ) $ (514,000 )
Common stock (630,000 ) (340,000 )
Retained earnings, 12/31/21 (780,000 ) (587,000 )
Total liabilities and stockholders' equity $ (2,256,000 ) $ (1,441,000 )

Gibson acquired 60 percent of Davis on April 1, 2021, for $566,700. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $45,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $377,800. Davis earned income evenly during the year but declared the $30,000 dividend on November 1, 2021.

Prepare a consolidated income statement for the year ending December 31, 2021.

Determine the consolidated balance for each of the following accounts as of December 31, 2021:

  • Goodwill
  • Equipment (net)
  • Common stock
  • Buildings (net)
  • Dividends declared

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