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Gibson acquired 60 percent of Davis on April 1, 2021, for $549,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $66,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $366,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2021. a. Prepare a consolidated income statement for the year ending December 31, 2021. b. Determine the consolidated balance for each of the following accounts as of December 31, 2021:

Gibson acquired 60 percent of Davis on April 1, 2021, for $549,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $66,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $366,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2021. a. Prepare a consolidated income statement for the year ending December 31, 2021. b. Determine the consolidated balance for each of the following accounts as of December 31, 2021:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021: Davis (380,000) 180,000 68,000 0 Sales Cost of goods sold. Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Davis. Buildings (net) Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and stockholders' equity $ $ $ $ $ Gibson (789,000) $ 393,000 250,000 (12,000) (158,000) $ (132,000) (723,000) $ (158,000) 80,000 (801,000) $ $ 170,400 515,000 549,600 557,000 458,000 2,250,000 $ $ (444,000) (132,000) 20,000 (556,000) 107,000 121,000 0 695,000 490,000 $ 1,413,000 (819,000) $ (517,000) (630,000) (801,000) $ (2,250,000) (340,000) (556,000) $(1,413,000) Gibson acquired 60 percent of Davis on April 1, 2021, for $549,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $66,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $366,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2021. a. Prepare a consolidated income statement for the year ending December 31, 2021. b. Determine the consolidated balance for each of the following accounts as of December 31, 2021:
Transcribed Image Text:Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021: Davis (380,000) 180,000 68,000 0 Sales Cost of goods sold. Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Davis. Buildings (net) Equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and stockholders' equity $ $ $ $ $ Gibson (789,000) $ 393,000 250,000 (12,000) (158,000) $ (132,000) (723,000) $ (158,000) 80,000 (801,000) $ $ 170,400 515,000 549,600 557,000 458,000 2,250,000 $ $ (444,000) (132,000) 20,000 (556,000) 107,000 121,000 0 695,000 490,000 $ 1,413,000 (819,000) $ (517,000) (630,000) (801,000) $ (2,250,000) (340,000) (556,000) $(1,413,000) Gibson acquired 60 percent of Davis on April 1, 2021, for $549,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $66,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $366,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2021. a. Prepare a consolidated income statement for the year ending December 31, 2021. b. Determine the consolidated balance for each of the following accounts as of December 31, 2021:
Goodwill Equipment (net) Common stock Buildings (net) Dividends declared Complete this question by entering your answers in the tabs below. Required A Required B Answer is not complete. Prepare a consolidated income statement for the year ending December 31, 2021. (Enter all amounts as positive values.) Consolidated Income Statement For the Year Ending December 31, 2021 Revenues Cost of goods sold Operating expenses Consolidated net income Noncontrolling interest in CNI Controlling interest in CNI 333333 528,000 291,100✔ < Required A $ 1,074,000 $ 819,100 254,900 254,900 Required B >
Transcribed Image Text:Goodwill Equipment (net) Common stock Buildings (net) Dividends declared Complete this question by entering your answers in the tabs below. Required A Required B Answer is not complete. Prepare a consolidated income statement for the year ending December 31, 2021. (Enter all amounts as positive values.) Consolidated Income Statement For the Year Ending December 31, 2021 Revenues Cost of goods sold Operating expenses Consolidated net income Noncontrolling interest in CNI Controlling interest in CNI 333333 528,000 291,100✔ < Required A $ 1,074,000 $ 819,100 254,900 254,900 Required B >
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