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 $450,000. At the acquisition date, the fair value of the noncontrolling interest was $300,000 and Kellers book value was $590,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $160,000. This intangible asset is being amortized over 20 years.

Gibson sold Keller land with a book value of $75,000 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 $126,000 to Gibson at a price of $210,000. During 2018, intra-entity shipments totaled $260,000, although the original cost to Keller was only $182,000. 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 $35,000 at the end of 2018.

Gibson Company Keller CompanySales$(860,000) $(560,000)Cost of goods sold 560,000 360,000 Operating expenses 160,000 55,000 Equity in earnings of Keller (87,000) 0 Net income$(227,000) $(145,000)Retained earnings, 1/1/18$(1,176,000) $(650,000)Net income (above) (227,000) (145,000)Dividends declared 145,000 55,000 Retained earnings, 12/31/18$(1,258,000) $(740,000)Cash$175,000 $70,000 Accounts receivable 368,000 470,000 Inventory 450,000 380,000 Investment in Keller 828,000 0 Land 170,000 450,000 Buildings and equipment (net) 502,000 360,000 Total assets$2,493,000 $1,730,000 Liabilities$(585,000) $(510,000)Common stock (650,000) (380,000)Additional paid-in capital 0 (100,000)Retained earnings, 12/31/18 (1,258,000) (740,000)Total liabilities and equities$(2,493,000) $(1,730,000)

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1. Prepare a worksheet to consolidate the separate 2018 financial statements for Gibson and Keller.

2. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building with a $90,000 book value (cost of $200,000) to Keller for $160,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.