Following are the individual financial statements for Gibson and Davis for the year ending...

Question:

Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2018:

GibsonDavis
Sales$(821,000)$(422,000)
Cost of goods sold382,000211,000
Operating expenses262,00066,000
Dividend income(24,000)0
Net income$(201,000)$(145,000)
Retained earnings, 1/1/18$(774,000)$(485,000)
Net income(201,000)(145,000)
Dividends declared50,00040,000
Retained earnings, 12/31/18$(925,000)$(590,000)
Cash and receivables$258,650$171,000
Inventory540,000235,000
Investment in Davis595,3500
Buildings (net)547,000661,000
Equipment (net)444,000432,000
Total assets$2,385,000$1,499,000
Liabilities$(830,000)$(569,000)
Common stock(630,000)(340,000)
Retained earnings, 12/31/18(925,000)(590,000)
Total liabilities and stockholders' equity$(2,385,000)$(1,499,000)

Gibson acquired 60 percent of Davis on April 1, 2018, for $595,350. 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 $396,900. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2018.

1Prepare a consolidated income statement for the year ending December 31, 2018.

2. Determine the consolidated balance for each of the following accounts as of December 31, 2018: a. Goodwill

a. Equipment (net)

b. Common stock

c. Buildings (net)

d. Dividends declared

Cost Accounting:

In Cost, accounting is involved with determining the cost of products, processes, etc.. cost accounting is the classifying, Recording and suitable allocation of expenditure for the determination of the costs of products or services, cost accounting involves the unit cost of a manufacturer's products in order to report the cost of inventory on its balance sheet and the cost of goods sold on its income statement.

Answer and Explanation: 1

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Investment Account balance Indicates the Initial Value Method

...
Particulars Amount($)
Consideration transferred by Gibson

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Preparing Standard Cost Income Statements

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Chapter 13 / Lesson 5
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If your firm is going to use a standard cost system of accounting, then you should prepare to deal with plenty of standard cost income statements every accounting period. This lesson shows you how to prepare them.


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