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 $930,000. At the acquisition date, the fair value of the noncontrolling interest was $620,000 and Kellers 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 sold Keller land with a book value of $60,000 on January 2, 2017, for $140,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2017, it shipped inventory costing $216,000 to Gibson at a price of $360,000. During 2018, 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 2018.

Gibson Company Keller Company

Sales $ (1,010,000 ) $ (710,000 )

Cost of goods sold 710,000 510,000

Operating expenses 200,000 60,000

Equity in earnings of Keller (84,000 ) 0

Net income $ (184,000 ) $ (140,000 )

Retained earnings, 1/1/18 $ (1,326,000 ) $ (725,000 )

Net income (above) (184,000 ) (140,000 )

Dividends declared 130,000 75,000

Retained earnings, 12/31/18 $ (1,380,000 ) $ (790,000 )

Cash $ 190,000 $ 70,000

Accounts receivable 398,000 620,000

Inventory 600,000 530,000

Investment in Keller 1,032,000 0

Land 180,000 600,000

Buildings and equipment (net) 517,000 510,000

Total assets $ 2,917,000 $ 2,330,000

Liabilities $ (737,000 ) $ (920,000 )

Common stock (800,000 ) (530,000 )

Additional paid-in capital 0 (90,000 )

Retained earnings, 12/31/18 (1,380,000 ) (790,000 )

Total liabilities and equities $ (2,917,000 ) $ (2,330,000 )

(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 $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.