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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
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 $930,000. At the acquisition date, the fair value of the noncontrolling interest was $620,000 and Keller's 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 uses the partial equity method to account for its investment in Keller. Gibson sold Keller land with a book value of $60,000 on January 2, 2020, for $140,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $216,000 to Gibson at a price of $360,000. During 2021, 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 2021 Gibson Company Keller Company Sales $ (1,010,000) $ (710,000) Cost of goods sold 710,000 510,000 Operating expenses 2ee, eae se, eae Equity in earnings of Keller (84,680) Net income $(184,00) $ ( (140,000) Retained earnings, 1/1/21 $ (1,326,000) $ (725,000) Net income (above) (184,000) (149,800) Dividends declared 130,000 75,000 Retained earnings, 12/31/21 5 (1,380,000) $ (790,000) Cash $ 190,000 $ 70.000 Accounts receivable 398,eee 620,000 Inventory 6ee,eee 53e.ee Investment in Keller 1,032,000 Land 180.000 600,000 Buildings and equipment (net) 517,080 510,000 Total assets $ 2,917,000 $ 2,330,000 Liabilities $ (737,000) $ (920,000) Common stock (880, 880) (530,000) Additional paid in capital (90, eee) Retained earnings, 12/31/21 (1,380,000) (790, eee) Total liabilities and equities $ (2,917,000) $ (2,330,000) (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 $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. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller. (Do not round Intermediate calculations. For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less GIBSON AND KELLER Consolidation Worksheet For the Year Ending December 31, 2021 Consolidation Entries Accounts Gibson Keller Debit Credit Noncontrolling Consolidated Interest Totals $ (1,310,000) 410,000 $ (1.010,000) $ (710,000) S 710,000 510.000 200,000 60.000 (84,000) 0 $ (184,000) $ (184,000) $ (140,000) $ (1,326,000) Sales Cost of goods sold Operating expenses Equity in earnings of Keller Separate company net income Consolidated net income To noncontrolling interest To Gibson Company Retained earnings, 1/1/21-Gibson Retained earnings, 1/1/21-Keller Net income Dividends declared Retained earnings, 12/31/21 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Customer list Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Total liabilities and equity (725,000) (184,000) (140.000) 130,000 75,000 $ (1,380,000) $ (790,000) S 190,000 $ 70,000 398,000 620.000 600,000 530.000 1,032,000 180,000 600.000 510.000 517,000 $ 2,917,000 $2,330,000 S (737,000) $ (920,000) (800,000) (530,000) (90,000) (1,380,000) (790,000) $ (2.917.000) $ (2.330,000) $ 410.000 $ 0
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