Question
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2018: Gibson Davis Sales $ (827,000 ) $ (372,000
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2018:
Gibson | Davis | ||||||
Sales | $ | (827,000 | ) | $ | (372,000 | ) | |
Cost of goods sold | 392,000 | 172,000 | |||||
Operating expenses | 224,000 | 83,000 | |||||
Dividend income | (12,000 | ) | 0 | ||||
Net income | $ | (223,000 | ) | $ | (117,000 | ) | |
Retained earnings, 1/1/18 | $ | (710,000 | ) | $ | (408,000 | ) | |
Net income | (223,000 | ) | (117,000 | ) | |||
Dividends declared | 70,000 | 20,000 | |||||
Retained earnings, 12/31/18 | $ | (863,000 | ) | $ | (505,000 | ) | |
Cash and receivables | $ | 162,250 | $ | 87,000 | |||
Inventory | 596,000 | 227,000 | |||||
Investment in Davis | 558,750 | 0 | |||||
Buildings (net) | 573,000 | 664,000 | |||||
Equipment (net) | 409,000 | 434,000 | |||||
Total assets | $ | 2,299,000 | $ | 1,412,000 | |||
Liabilities | $ | (806,000 | ) | $ | (567,000 | ) | |
Common stock | (630,000 | ) | (340,000 | ) | |||
Retained earnings, 12/31/18 | (863,000 | ) | (505,000 | ) | |||
Total liabilities and stockholders' equity | $ | (2,299,000 | ) | $ | (1,412,000 | ) | |
Gibson acquired 60 percent of Davis on April 1, 2018, for $558,750. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $63,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $372,500. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2018.
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Prepare a consolidated income statement for the year ending December 31, 2018.
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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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Prepare a consolidated income statement for the year ending December 31, 2018.
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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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