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 Net income $ (150,000 ) $ (100,000 ) Retained earnings, 1/1/13 $ (700,000 ) $ (400,000 ) Net income (150,000 ) (100,000 ) Dividends paid 80,000 40,000 Retained earnings, 12/31/13 $ (770,000 ) $ (460,000 ) 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 Total assets $ 2,200,000 $ 1,290,000 Liabilities $ (800,000 ) $ (490,000 ) Common stock (630,000 ) (340,000 ) Retained earnings, 12/31/13 (770,000 ) (460,000 ) Total liabilities and stockholders’ equity $ (2,200,000 ) $ (1,290,000 ) 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 $ $ $

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...

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

Net income	$	(150,000	)	$	(100,000	)

Retained earnings, 1/1/13	$	(700,000	)	$	(400,000	)
Net income	(150,000	)	(100,000	)
Dividends paid	80,000	40,000

Retained earnings, 12/31/13	$	(770,000	)	$	(460,000	)

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

Total assets	$	2,200,000	$	1,290,000

Liabilities	$	(800,000	)	$	(490,000	)
Common stock	(630,000	)	(340,000	)
Retained earnings, 12/31/13	(770,000	)	(460,000	)

Total liabilities and stockholders’ equity	$	(2,200,000	)	$	(1,290,000	)

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	$
$
$

Answered Same DayDec 22, 2021

Answer To: Following are the individual financial statements for Gibson and Davis for the year ending December...

David answered on Dec 22 2021

129 Votes

a. Investment account balance indicates the initial value method.

Consideration transferred by Gibson .............. $528,000
Noncontrolling interest fair value .................. 352,000
Davis acquisition-date fair value ................... 880,000
Book value of Davis (see below).................... (765,000)
Fair value in excess of book value ................ $115,000
Excess assigned based on fair value: Annual Excess
Life Amortizations
Equipment (overvalued) ..................... (30,000) 5 years $(6,000)
Goodwill .......................................... $145,000 indefinite -0-
Total ...

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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...

Answer To: Following are the individual financial statements for Gibson and Davis for the year ending December...

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