Q.12

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 $930,000. At the acquisition date, the fair value of the noncontrolling Interest was $620,000 and Keller's book value was $1.240,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition date fair value of $310,000. 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 $60,000 on January 2, 2020, for $140,000. Keler still holds this land at the end of the current year. Keter regularly transfers inventory to Gibson, in 2020, it shipped Inventory costing $216,000 to Gibson at a price of $360,000. During 2021. Intra-entity shipments totaled $410,000, although the original cost to Keller was only $287.000. 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 $65,000 at the end of 2021 Sales Coat of goods sold Operating expensen Equity in earnings of Keller Net Income Retained earning. 1/1/21 Met inconte (above) Dividende declared Rota ned earningu, 12/31/21 Cash Accounts receivable Inventory Tevestment in Keller Land buildings and equipment (net) Gibeon eller Company Company $(1,010,000) (710,000) 710,000 510,000 200,000 60,000 (84.000 0 104,0001 $ 140,000) 001, 326,000) 1725.000) (104.000) (140,000) 130.000 75,000 1,200.000 (790,000) 190,000 70,000 098.000 620,000 600,000 530,000 1.032.000 0 180,000 600,000 $17.000 510.000 $ 2.917.000 $ 2.330.000 $ (737.000) 5 (920,000) (800,000) (530,000) (90,000) Total assets stabilities common stock Additional paid in capital end of 2021. Sales Cost of goods sold Operating expenses Equity in earnings of Keller Net income Retained earninge, 1/1/21 Net Income (above) Dividends declared Keller Company $ (710,000) 510,000 60,000 0 $ (140,000) Retained earnings, 12/31/21 Canh Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earninge, 12/31/21 Total liabilities and equities Gibson Company $(1,010,000) 710,000 200,000 (84,000) $ (184,000) $(1,326,000) (184,000) 130,000 $(1,380,000) $ 190,000 398,000 600,000 1,032,000 180,000 517,000 $ 2,917,000 3 (737,000) (800,000) 0 (1,380,000) $(2,917,000) $ (725,000) (140,000) 75,000 $ (790,000) 5 70,000 620,000 530,000 0 600,000 510,000 $ 2, 330,000 5 (920,000) (530,000) 90,000) (790,000 $(2,330,000) (Note: Parentheses indicate a credit balance.) a. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller b. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a $165,000 book value (cost of $350,000) to Keller for $310,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller. (Do not round intermediate calculations. For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less GIBSON AND KILLER Consolidation Worksheet For the Year Ending December 31, 2021 Consolidation Entries Accounts Gibson Keller Debit Credit Noncontrolling Interest Consolidated Totals $ 710,000) (1.010.000) 710.000 $10,000 438,800 $ 410,000 24,500 15,500 84.000 5 (1,310,000) 305,800 275,500 (220,700) 200,000 60.000 (84,000) S (184,000) $ (140,000) Sales Cost of goods sold Operating expenses Equity in earnings of Keler Separate company net income Consolidated net income To no controling interest To Gibson Company Retained caminos, 1/1/21 Gibson Retained earings, 1/1/21 Keller Net Income Dividends declared (51 480) (228,700) 51,480 (177.220) 106,560 (1,320.000) 725,000 (1.219,42010 (164,000) (725.000) (140,000) 75,000 130.000 45.000 177.220 130.000 5 (1.206,640) S Retained comings, 12/31/21 5 (700,000) 0,380.000) s 190.000 5 70,000 Cash Accounts receivable Invertory 620,000 300,000 65,000 24.000 200.000 600,000 830.000 200,000 60,000 15,500 275,500 (228,700) 0 84,000 Operating expenses Equity in earnings of Keller Separate company net income Consolidated net income To noncontroling interest (84,000) $ (184,000) $ (140,000) $ (51,480) $ (228,700) 51,480 (177,220) To Gibson Company 106,580 (1,326,000) (725,000) 725,000 (1.219,420) Retained earnings, 1/1/21-Gibson Retained earings, 1/1/21-Keller Net Income Dividends declared (140,000) 75,000 45,000 177,220 $ 130,000 Retained earnings, 12/31/21 (184,000) 130,000 IS (1,380,000) $ 190,000 398,000 600,000 $ (790,000) $ 70,000 $ (1,266,640) 620,000 65,000 530,000 24,600 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Customer list 1,032,000 45,000 1,077,000 260,000 953,000 1,105,400 180,000 600,000 80,000 517,000 510,000 294,500 15,500 Total assets 700,000 1,027,000 279,000 $ 2,917,000 $ (737,000) (800,000) $ $ Liabilities $ $ 2,330,000 $ (920,000) (530,000) (90,000) (790,000) 65,000 530,000 Common stock 423,400 90,000 (1,380,000) Additional pald-in capital Retained earnings, 12/31/21 Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 644,280 $ (665,760) Total liabilities and equity Is (2,330,000) $ 2,390,180 $ 2,390,180 (2.917.000) 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 $930,000. At the acquisition date, the fair value of the noncontrolling interest was $620,000 and Keller's book value was $1.240,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $310,000. 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 $60,000 on January 2, 2020, for $140,000 Keller still holds this land at the end of the current year Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $216,000 to Gibson at a price of $360,000. During 2021, Intra entity shipments totaled $410,000, although the original cost to Keller was only $287.000. In each of these years. 20 percent of the merchandise was not resold to outside parties until the peciod following the transfer. Gibson owes Keller $65,000 at the end of 2021 Teller company $ (710,000) $10,000 60,000 Sales Coat of goods sold Operating expenses Equity in earnings of Keller Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Cibaon Company $(1,010,000) 710,000 200,000 (64.000) 5 (184,000) 501,326,000) (184,000) 130.000 $(1,300,000) $ 190,000 390,000 600,000 2,032,000 180,000 517.000 $ 2,917,000 5 (737,000) (800,000) $ 140,000) 5 (725,000) (140,000) 75,000 $ (790,000) $ 70,000 620.000 530,000 Retained earnings, 12/31/21 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Total anneta 600,000 510,000 $ 2,330,000 $(920,000) (530,000) (90,000 Liabilities Common stock Additional baid-in capital 12 MISLIM W LACE WHIC end of 2021 Return to Sales Cost of yoods sold Operating expenses Equity in earning of Xoller Net income Retained earninga, 1/1/21 Net Income (above) Dividends declared Retained earningo, 12/31/21 Cash Gibson Roller Company Company $(1,010,000) (710,0001 710,000 510,000 200,000 60,000 84.000 O 6 (106,000) $ 140,000) $11,326,000) 5 (725,000) (184,000) (140,000) 130.000 75,000 $(1,380,000) $ (790,000) $ 190,000 $ 70 000 398,000 620,000 600.000 530.000 1,032,000 180,000 600.000 327.000 510.000 6 2.917.000 $ 2,330,000 $(737,000) (920,000) 000,000) (530,000) 0 (90,000) 1.300.000) (790,000) $(2.917.000) ${2,330,000) Accounts receivable Inventory Tavestment in Keller Land Buildings and equipment Total a Liabilities Condon stock Additional paid-in capital Betained earninga, 12/31/21 Total liabilities and equities 0 (Note: Parentheses indicate a credit balance.) a. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller b. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a $165,000 book value (cost of $350,000) to Keller for $310,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Return to question Required A Required B Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller. (Do not round intermediate calculations. For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less GIBSON AND KELLER Consolidation Worksheet For the Year Ending December 21, 2021 Consolidation Entries Noncontrolling Interest Debit Consolidated Totale Gibson Credit Accounts Keller Sales $ (710,000) 1.010.000) 710.000 510,000 438.000 $410,000 24.000 15.500 84.000 $ (3,310.000) B05.200 275.500 228.700) 200.000 60.000 0 Cost of goods sold Operating expenses Equity in earnings of Keller Separate company net income Consolidated net income To no controlling interest To Gibeon Company (84000) $ (184.000) $ (640,000) 3 51.400) (228.700) 51.450 (177-220) $ $ (1,326.000) 106.580 725,000 (1.219,420) Retained earnings, 1/1/21-Gibson Retained earnings 1/1/21-Kelee Net Income Dividends declared Retained earnings, 123121 (725.000) (140.000) 75.000 (184.000) 150.000 177.220 45.000 5 130.000 (700.000) (1300.000 177,220 Retained camnings, 12/3121 $ (790,000) $ 130,000 (1,380,000) $ 190,000 Cash s 70,000 S (1.266,640) Accounts receivable 398,000 620,000 65,000 24,600 600,000 530,000 1,032,000 45,000 Inventory Investment in Keller Land Buildings and equipment (net) Customer list 1,077.000 80,000 200,000 953,000 1.105.400 180,000 800,000 517,000 510,000 294,500 15,500 Total assets $ 2,917,000 $ (737,000) (800,000) $ $ 700.000 1,027.000 279,000 423,400 $ 2,330,000 $ (920,000) (530,000) (90,000) (790,000) 65,000 530,000 3 Liabilities Common stock Additional paid-in capital Retained earnings 12/31/21 Noncontrolling Interest 1/1/21 Noncontrolling interest 12/31/21 90,000 (1,380,000) 644,280 S (665,760) Total liabilities and equity (2.917.000) S 2,390,180 12.330,000) $ 2,390,180 Prey 12 of 12 Neyt