FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2024:
| Account | Gibson | Davis |
|---|---|---|
| Sales | $ (731,000) | $ (444,000) |
| Cost of goods sold | 334,000 | 197,000 |
| Operating expenses | 256,000 | 67,000 |
| Dividend income | (12,000) | 0 |
| Net income | $ (153,000) | $ (180,000) |
| $ (711,000) | $ (487,000) | |
| Net income | (153,000) | (180,000) |
| Dividends declared | 60,000 | 20,000 |
| Retained earnings, 12/31/24 | $ (804,000) | $ (647,000) |
| Cash and receivables | $ 120,000 | $ 230,000 |
| Inventory | 521,000 | 251,000 |
| Investment in Davis | 603,000 | 0 |
| Buildings (net) | 590,000 | 614,000 |
| Equipment (net) | 410,000 | 444,000 |
| Total assets | $ 2,244,000 | $ 1,539,000 |
| Liabilities | $ (810,000) | $ (552,000) |
| Common stock | (630,000) | (340,000) |
| Retained earnings, 12/31/24 | (804,000) | (647,000) |
| Total liabilities and |
$ (2,244,000) | $ (1,539,000) |
Gibson acquired 60 percent of Davis on April 1, 2024, for $603,000. 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 $402,000. Davis earned income evenly during the year but declared the $20,000 dividend on November 1, 2024.
Required:
-
Prepare a consolidated income statement for the year ending December 31, 2024.
-
Determine the consolidated balance for each of the following accounts as of December 31, 2024:
Goodwill - Equipment (net)
- Common stock
- Buildings (net)
- Dividends declared
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