The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2010, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2009, in exchange for various considerations totaling $570,000. At the acquisition date, the fair value of the noncontrolling interest was $380,000 and Keller’s book value was $850,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $100,000. This intangible asset is being amortized over 20 years. LO8 Gibsqn sold Keller land with a book value of $60,000 on January 2, 2009, for $100,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2009, it shipped inventory costing $100,000 to Gibson at a price of $ 150,000. During 2010, intercompany shipments totaled $200,000, although the original cost to Keller was only $ 140,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Gibson owes Keller $40,000 at the end of 2010.

Gibson Keller Company Company Sales.

. $ (800,000)

$ (500,000)

Cost of goodssold.

. 500,000 300,000 Operating expenses.

. 100,000 60,000 Income of KellerCompany.

. (84,000)

-0-

Netincome.

. $ (284,000)

$ (140,000)

Retained earnings, 1/1/10.

. $(1,116,000)

$ (620,000)

Net income (above).

. (284,000)

(140,000)

Dividends paid.

..._ 115,000 60,000 Retained earnings, 12/31/10.

. $(1,285,000)

$ (700,000)

Cash.

$ 90,000 Accounts receivable.

. 356,000 410,000 Inventory.

320,000 Investment in Keller Company .

. 726,000

-0-

Land.

390,000 Buildings and equipment (net) .

. 496,000 300,000 Totalassets.

$ 1,510,000 Liabilities.

$ (400,000)

Common stock.

(320,000)

Additional paid-in capital.

. 0

(90,000)

Retained earnings, 12/31/10 ... .

. (1,285,000)

(700,000)

Total liabilities and equities.

. $(2,375,000)

$(1,510,000)

a. Prepare a worksheet to consolidate the separate 2010 financial statements for Gibson and Keller.

b. How would the consolidation entries in requirement

(a) have differed if Gibson had sold a building with a $60,000 book value (cost of $140,000) to Keller for $100,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.