Problem 4-39 (LO 4-1, 4-4, 4-8)

Gibson acquired 60 percent of Davis on April 1, 2015, for $531,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $75,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $354,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2015.

Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2015: Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/15 Net income Dividends declared Retained earnings, 12/31/15 Cash and receivables Inventory Investment in Davis Buildings (net) Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31/15 Total liabilities and stockholders' equity Gibson $ (643,000) 321,000 180,000 (24,000) Davis $ (397,500) 198,000 75,500 0 $ (166,000) $ (124,000) $ (748,000) (166,000) 70,000 $ (405,000) (124,000) 40,000 $ (844,000) $ (489,000) $ $ 254,400 550,000 531,600 525,000 495,000 149,000 230,000 0 612,000 412,000 $ 2,356,000 $ 1,403,000 $ (882,000) (630,000) (844,000) $ (574,000) (340,000) (489,000) $(2,356,000) $ (1,403,00 ) 0 Gibson acquired 60 percent of Davis on April 1, 2015, for $531,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $75,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $354,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2015. a. Prepare a consolidated income statement for the year ending December 31, 2015. (Enter all amounts as positive values.) b. Determine the consolidated balance for each of the following accounts as of December 31, 2015. Goodwill Equipment Common stock Buildings Dividends declared