Q-1

The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2021, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2020, in exchange for various considerations totaling $540,000. At the acquisition date, the fair value of the noncontrolling interest was $360,000 and Kellers book value was $710,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $190,000. This intangible asset is being amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller.

Gibson sold Keller land with a book value of $90,000 on January 2, 2020, for $180,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $144,000 to Gibson at a price of $240,000. During 2021, intra-entity shipments totaled $290,000, although the original cost to Keller was only $203,000. 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 $50,000 at the end of 2021.

	Gibson Company				Keller Company
Sales	$	(890,000	)		$	(590,000	)
Cost of goods sold		590,000				390,000
Operating expenses		190,000				70,000
Equity in earnings of Keller		(78,000	)			0
Net income	$	(188,000	)		$	(130,000	)
Retained earnings, 1/1/21	$	(1,206,000	)		$	(665,000	)
Net income (above)		(188,000	)			(130,000	)
Dividends declared		115,000				70,000
Retained earnings, 12/31/21	$	(1,279,000	)		$	(725,000	)
Cash	$	178,000			$	100,000
Accounts receivable		374,000				500,000
Inventory		480,000				410,000
Investment in Keller		849,000				0
Land		200,000				480,000
Buildings and equipment (net)		505,000				390,000
Total assets	$	2,586,000			$	1,880,000
Liabilities	$	(627,000	)		$	(655,000	)
Common stock		(680,000	)			(410,000	)
Additional paid-in capital		0				(90,000	)
Retained earnings, 12/31/21		(1,279,000	)			(725,000	)
Total liabilities and equities	$	(2,586,000	)		$	(1,880,000	)

(Note: Parentheses indicate a credit balance.)

1. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller.
2. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a $105,000 book value (cost of $230,000) to Keller for $190,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.

NOTE: I NEED ANSWERS IN THE FOLLOWING FORMAT WITH FILLED CELLS.

GIBSON AND KELLER Consolidation Worksheet For the Year Ending December 31, 2021 Consolidation Entries Noncontrolling Consolidated Accounts Gibson Keller Debit Credit Interest Totals $ (890,000) $ (590,000) 590,000 390,000 190,000 70,000 0 (78,000) S (188,000) $ (130.000) Sales Cost of goods sold Operating expenses Equity in earnings of Keller Separate company net income Consolidated net income To noncontrolling interest To Gibson Company Retained earnings, 1/1/21-Gibson Retained earnings, 1/1/21Keller Net income Dividends declared Retained earnings, 12/31/21 Cash Accounts receivable $ (1.206,000) (665,000) (188,000) (130,000) 115,000 70,000 5 (1,279,000) $ (725,000) $ 178,000 $ 100,000 374,000 500,000 $ 178,000 $ 100.000 374,000 500,000 Cash Accounts receivable Inventory Investment in Keller 480,000 410.000 849,000 Land 200.000 480.000 505,000 390,000 Buildings and equipment (net) Customer list Total assets Liabilities Common stock Additional paid-in capital Retained earnings 12/31/21 Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Total liabilities and equity $ 2,586,000 $ 1,880,000 $ (627,000) $ (655,000) (680,000) (410,000) (90,000) (1.279,000) (725.000) $ (2.586,000) $ (1.880.000) $ 0 $ $ 665,000 Required A Required B >