The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $390,000. At the acquisition date, the fair value of the noncontrolling interest was $260,000 and Bellstars book value was $510,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $140,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar.

Abbey sold Bellstar land with a book value of $65,000 on January 2, 2023, for $130,000. Bellstar still holds this land at the end of the current year.

Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $133,000 to Abbey at a price of $190,000. During 2024, intra-entity shipments totaled $240,000, although the original cost to Bellstar was only $156,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $60,000 at the end of 2024.

ItemsAbbey CompanyBellstar CompanySales$ (840,000)$ (540,000)Cost of goods sold540,000340,000Operating expenses140,00045,000Equity in earnings of Bellstar(93,000)0Net income$ (253,000)$ (155,000)Retained earnings, 1/1/24$ (1,156,000)$ (640,000)Net income (above)(253,000)(155,000)Dividends declared135,00045,000Retained earnings, 12/31/24$ (1,274,000)$ (750,000)Cash$ 173,000$ 100,000Accounts receivable364,000450,000Inventory430,000360,000Investment in Bellstar798,0000Land150,000430,000Buildings and equipment (net)500,000340,000Total assets$ 2,415,000$ 1,680,000Liabilities$ (511,000)$ (490,000)Common stock(630,000)(360,000)Additional paid-in capital0(80,000)Retained earnings, 12/31/24(1,274,000)(750,000)Total liabilities and equities$ (2,415,000)$ (1,680,000)

Note: Parentheses indicate a credit balance.

Required:

Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar.

How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $80,000 book value (cost of $180,000) to Bellstar for $140,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.

The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $390,000. At the acquisition date, the fair value of the noncontrolling interest was $260,000 and Bellstars book value was $510,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $140,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar.

Abbey sold Bellstar land with a book value of $65,000 on January 2, 2023, for $130,000. Bellstar still holds this land at the end of the current year.

Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $133,000 to Abbey at a price of $190,000. During 2024, intra-entity shipments totaled $240,000, although the original cost to Bellstar was only $156,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $60,000 at the end of 2024.

ItemsAbbey CompanyBellstar CompanySales$ (840,000)$ (540,000)Cost of goods sold540,000340,000Operating expenses140,00045,000Equity in earnings of Bellstar(93,000)0Net income$ (253,000)$ (155,000)Retained earnings, 1/1/24$ (1,156,000)$ (640,000)Net income (above)(253,000)(155,000)Dividends declared135,00045,000Retained earnings, 12/31/24$ (1,274,000)$ (750,000)Cash$ 173,000$ 100,000Accounts receivable364,000450,000Inventory430,000360,000Investment in Bellstar798,0000Land150,000430,000Buildings and equipment (net)500,000340,000Total assets$ 2,415,000$ 1,680,000Liabilities$ (511,000)$ (490,000)Common stock(630,000)(360,000)Additional paid-in capital0(80,000)Retained earnings, 12/31/24(1,274,000)(750,000)Total liabilities and equities$ (2,415,000)$ (1,680,000)

Note: Parentheses indicate a credit balance.

Required:

Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar.

How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $80,000 book value (cost of $180,000) to Bellstar for $140,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.