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,
|