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:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Bb3.
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:
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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