Solution-Prepare a consolidated income statement for the

Prepare a consolidated income statement for the year

Reference no: EM131774695

Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2015:

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	)

Retained earnings, 1/1/15	$	(711,000	)	$	(487,000	)
Net income	(153,000	)	(180,000	)
Dividends declared	60,000	20,000

Retained earnings, 12/31/15	$	(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, 12/31/15	(804,000	)	(647,000	)

Total liabilities and stockholders' equity	$	(2,244,000	)	$	(1,539,000	)

Gibson acquired 60 percent of Davis on April 1, 2015, 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 $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,

Reference no: EM131774695

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Prepare a consolidated income statement for the year

Reference no: EM131774695

Reference no: EM131774695

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