Prepare the necessary consolidation entries the problem. The parent company is using the initial value (cost) method to account for its subsidiary. This is the first year of acquisition so there is no need for a C* Entry, the beginning balances of the Investment account is equal under all three methods. Please be aware that the book value of Davis on 4/1/2013 is $765,000. Each consolidation entry should be labeled and in proper form (indention and alignment of debits and credits). You should check that your entries exactly eliminate the balance in the Investment of Davis account.

Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2013: Gibson acquired 60 percent of Davis on April 1, 2013. for $528,000. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $30,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $352,000. Davis earned income evenly during the year but paid the entire dividend on November 1, 2013