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The individual financial statements for Gibson Company and Keller Company for the year ending December 3 1 , 2 0 2 1 , follow. Gibson

The individual financial statements for Gibson Company and Keller Company for the year ending December
31,2021, follow. Gibson acquired a 60 percent interest in Keller on January 1,2020, in exchange for various
considerations totaling $600,000. At the acquisition date, the fair value of the noncontrolling interest was
$400,000 and Keller's book value was $800,000. Keller had developed internally a customer list that was not
recorded on its books but had an acquisition-date fair value of $200,000. This intangible asset is being
amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller.
Gibson sold Keller land with a book value of $50,000 on January 2,2020, for $110,000. Keller still holds this
land at the end of the current year.
Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $175,000 to Gibson at a
price of $250,000. During 2021, intra-entity shipments totaled $300,000, although the original cost to Keller
was only $195,000. 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 $55,000 at the end of 2021.
(Note: Parentheses indicate a credit balance.)
a. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller.
b. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on
January 2,2020, with a $110,000 book value (cost of $240,000) to Keller for $200,000 instead of land, as
the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.
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