Return to Problem 5-35 (LO 5-1, 5-2,5-3,5-4,5-5, 5-6, 5-7) The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2018, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2017, in exchange for various considerations totaling $720,000. At the acquisition date, the fair value of the noncontrolling interest was $480,000 and Keller's book value was $960,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $240,000. This intangible asset is being amortized over 20 years. Gibson sold Keller land with a book value of $70,000 on January 2, 2017, for $150,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2017, it shipped inventory costing $188,500 to Gibson at a price of $290,000. During 2018, intra-entity shipments totaled $340,000, although the original cost to Keller was only $204,000. 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 $30,000 at the end of 2018. Sales Cost of goods sold Operating expenses Equity in earnings of Keller Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 Total liabilities and equities Gibson Company Keller Company $ (940,000) $ (640,000) 640,000 440,000 130,000 95,000 (63,000) $ (233,000) $ (105,000) $ (1,256,000) $ (690,000) (233,000) (105,000) 140,000 40,000 $ (1,349,000) $ (755,000) 183,000 100,000 384,000 550,000 530,000 460,000 933,000 250,000 530,000 510,000 440,000 $ 2,790,000 $ 2,080,000 (711,000) $ (765,000) (730,000) (460,000) (100,000) (1,349,000) (755,000) $ (2,790,000) $ (2,080,000) (Note: Parentheses indicate a credit balance.) a. Prepare a worksheet to consolidate the separate 2018 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 $130,000 book value (cost of $280,000) to Keller for $240,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a worksheet to consolidate the separate 2018 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. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Show less Consolidation Entries Debit Credit Accounts Gibson Keller Noncontrolling Interest $ (940,000) 640,000 130,000 (63,000) $ (233,000) $ (640,000) 440,000 95,000 20,300 27,200 12,000 63,000 Consolidated Totals $ (1,580,000) 1,086,900 237,000 0 $ (105,000) $ (34,440) 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, 1/1Gibson Retained earnings, 1/1Keller Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory $ $ (256,100) (34,440) (221,660) (1,155,700) (1,256,000) 790,300 (233,000) 140,000 (690,000) (105,000) 40,000 24,000 16,000 $ (1,349,000) $ 183,000 384,000 530,000 $ (221,660) 140,000 (1,237,360) 283,000 904,000 962,800 (159,000) 100,000 550,000 460,000 30,000 27,200 Net income Dividends declared Retained earnings, 12/31 (233,000) 140,000 24,000 16,000 (1.349.000) $ 183,000 384,000 530.000 933.000 (105,000) 40,000 $ (755,000) $ 100,000 550,000 460,000 (221,660) 140,000 $ (1,237,360) 283,000 904.000 962,800 30,000 27,200 933,000 80,000 0 250,000 510,000 530,000 440,000 240,000 12,000 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Customer list Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31 NCI in Keller, 1/1 NCI in Keller, 12/31 700,000 950,000 228,000 4,027,800 (1,446,000) (730,000) $ $ 2,790,000 $ (711,000) (730,000) $ 2,080,000 $ (765,000) (460,000) (100,000) (755,000) 30,000 460,000 100,000 0 (1,349,000) 596,000 X 614,440 (1,237,360) 0 (614,440) $ (4,027,800) Total liabilities and equity 790 000) 2080 000) $ 1,722,500 $ 1,722,500 Required A Required B How would the consolidation entries in requirement (a) have differed if Gibson had sold a building with a $130,000 book value (cost of $280,000) to Keller for $240,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction Accounts Debit Credit Return to Problem 5-35 (LO 5-1, 5-2,5-3,5-4,5-5, 5-6, 5-7) The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2018, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2017, in exchange for various considerations totaling $720,000. At the acquisition date, the fair value of the noncontrolling interest was $480,000 and Keller's book value was $960,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $240,000. This intangible asset is being amortized over 20 years. Gibson sold Keller land with a book value of $70,000 on January 2, 2017, for $150,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2017, it shipped inventory costing $188,500 to Gibson at a price of $290,000. During 2018, intra-entity shipments totaled $340,000, although the original cost to Keller was only $204,000. 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 $30,000 at the end of 2018. Sales Cost of goods sold Operating expenses Equity in earnings of Keller Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 Total liabilities and equities Gibson Company Keller Company $ (940,000) $ (640,000) 640,000 440,000 130,000 95,000 (63,000) $ (233,000) $ (105,000) $ (1,256,000) $ (690,000) (233,000) (105,000) 140,000 40,000 $ (1,349,000) $ (755,000) 183,000 100,000 384,000 550,000 530,000 460,000 933,000 250,000 530,000 510,000 440,000 $ 2,790,000 $ 2,080,000 (711,000) $ (765,000) (730,000) (460,000) (100,000) (1,349,000) (755,000) $ (2,790,000) $ (2,080,000) (Note: Parentheses indicate a credit balance.) a. Prepare a worksheet to consolidate the separate 2018 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 $130,000 book value (cost of $280,000) to Keller for $240,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a worksheet to consolidate the separate 2018 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. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Show less Consolidation Entries Debit Credit Accounts Gibson Keller Noncontrolling Interest $ (940,000) 640,000 130,000 (63,000) $ (233,000) $ (640,000) 440,000 95,000 20,300 27,200 12,000 63,000 Consolidated Totals $ (1,580,000) 1,086,900 237,000 0 $ (105,000) $ (34,440) 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, 1/1Gibson Retained earnings, 1/1Keller Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory $ $ (256,100) (34,440) (221,660) (1,155,700) (1,256,000) 790,300 (233,000) 140,000 (690,000) (105,000) 40,000 24,000 16,000 $ (1,349,000) $ 183,000 384,000 530,000 $ (221,660) 140,000 (1,237,360) 283,000 904,000 962,800 (159,000) 100,000 550,000 460,000 30,000 27,200 Net income Dividends declared Retained earnings, 12/31 (233,000) 140,000 24,000 16,000 (1.349.000) $ 183,000 384,000 530.000 933.000 (105,000) 40,000 $ (755,000) $ 100,000 550,000 460,000 (221,660) 140,000 $ (1,237,360) 283,000 904.000 962,800 30,000 27,200 933,000 80,000 0 250,000 510,000 530,000 440,000 240,000 12,000 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Customer list Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31 NCI in Keller, 1/1 NCI in Keller, 12/31 700,000 950,000 228,000 4,027,800 (1,446,000) (730,000) $ $ 2,790,000 $ (711,000) (730,000) $ 2,080,000 $ (765,000) (460,000) (100,000) (755,000) 30,000 460,000 100,000 0 (1,349,000) 596,000 X 614,440 (1,237,360) 0 (614,440) $ (4,027,800) Total liabilities and equity 790 000) 2080 000) $ 1,722,500 $ 1,722,500 Required A Required B How would the consolidation entries in requirement (a) have differed if Gibson had sold a building with a $130,000 book value (cost of $280,000) to Keller for $240,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction Accounts Debit Credit