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 $810,000. At the acquisition date, the fair value of the noncontrolling interest was $540,000 and Bellstar's book value was $1,080,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $270,000. 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 $85,000 on January 2, 2023, for $180,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $208,000 to Abbey at a price of $320,000. During 2024, intra-entity shipments totaled $370,000, although the original cost to Bellstar was only $222,000. 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 $45,000 at the end of 2024. Items Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash Accounts receivable Inventory Investment in Bellstar Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Abbey Company Bellstar Company $ (970,000) 670,000 160,000 (96,000) $ (236,000) $ (1,286,000) (236,000) 110,000 $ (1,412,000) $ 186,000 390,000 560,000 996,000 140,000 513,000 $ 2,785,000 $ (670,000) 470,000 40,000 $ (160,000) $ (705,000) (160,000) 55,000 $ (810,000) $ 80,000 580,000 490,000 560,000 470,000 $ 2,180,000 $ (613,000) (760,000) $ (790,000) 0 (1,412,000) $ (2,785,000) (490,000) (90,000) (810,000) $ (2,180,000) ABBEY AND BELLSTAR Consolidation Worksheet For the Year Ending December 31, 2024 Consolidation Entries Credit Accounts Abbey Bellstar Debit $ (970,000) $ (670,000) 470,000 40,000 0 Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Separate company net income Consolidated net income To noncontrolling interest To Abbey Company Retained earnings, Abbey, 1/1 Retained earnings, Bellstar, 1/1 Net income Dividends declared Cash S 670,000 160,000 (96,000) (236,000) S (160,000) $ (1,286,000) (236,000) 110,000 (705,000) (160,000) 55,000 S (810,000) Retained earnings, 12/31 $ (1,412,000) $ 186,000 $ 80,000 Accounts receivable 390,000 580,000 Inventory 560,000 490,000 Investment in Bellstar 996,000 Land 140,000 560,000 Buildings and equipment (net) 513,000 470,000 Trademark Total assets $ 2,785,000 $ 2,180,000 S (613,000) $ (790,000) (760,000) (490,000) (90,000) (1,412,000) (810,000) Liabilities Common stock Additional paid-in capital Retained earnings, 12/31 Noncontrolling interest 1/1 Noncontrolling interest 12/31 Total liabilities and equity $ (2,785,000) $ (2,180,000) $ $ Note: Parentheses Indicate a credit balance. Required: a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. b. How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $145,000 book value (cost of $310,000) to Bellstar for $270,000 Instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Complete this question by entering your answers in the tabs below. Required A Required B How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $145,000 book value (cost of $310,000) to Bellstar for $270,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Note: Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. view transaction list Consolidation Worksheet Entries < 1 2 Prepare Entry ED to remove the excess depreciation for the current year created by the transfer price. Note: Enter debits before credits. Transaction ED Accounts Debit Credit Record entry Clear entry view consolidation entries Show less Noncontrolling Consolidated Interest Totals Required A Required B How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $145,000 book value (cost of $310,000) to Bellstar for $270,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Note: Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. view transaction list Consolidation Worksheet Entries < 1 2 Prepare Entry *TA to defer the intra-entity gain as of the beginning of the year. Note: Enter debits before credits. Transaction *TA Accounts Debit Credit Record entry Clear entry view consolidation entries > Show less