Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2013:
| Gibson | Davis | |||||
| Sales | $ | (600,000 | ) | $ | (300,000 | ) |
| Cost of goods sold | 300,000 | 140,000 | ||||
| Operating expenses | 174,000 | 60,000 | ||||
| Dividend income | (24,000 | ) | 0 | |||
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| Net income | $ | (150,000 | ) | $ | (100,000 | ) |
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| Retained earnings, 1/1/13 | $ | (700,000 | ) | $ | (400,000 | ) |
| Net income | (150,000 | ) | (100,000 | ) | ||
| Dividends paid | 80,000 | 40,000 | ||||
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| Retained earnings, 12/31/13 | $ | (770,000 | ) | $ | (460,000 | ) |
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| Cash and receivables | $ | 248,000 | $ | 100,000 | ||
| Inventory | 500,000 | 190,000 | ||||
| Investment in Davis | 528,000 | 0 | ||||
| Buildings (net) | 524,000 | 600,000 | ||||
| Equipment (net) | 400,000 | 400,000 | ||||
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| Total assets | $ | 2,200,000 | $ | 1,290,000 | ||
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| Liabilities | $ | (800,000 | ) | $ | (490,000 | ) |
| Common stock | (630,000 | ) | (340,000 | ) | ||
| Retained earnings, 12/31/13 | (770,000 | ) | (460,000 | ) | ||
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| Total liabilities and stockholdersâ equity | $ | (2,200,000 | ) | $ | (1,290,000 | ) |
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Note: Parentheses indicate a credit balance.
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.
Prepare a consolidated income statement and calculate consolidated balances of:
| Goodwill | $ |
| Equipment | $ |
| $ | |
| $ | |
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