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 $330,000 At the acquisition date, the fair value of the noncontrolling interest was $220,000 and Kellers book value was $430,000 Keller had developed internally a customer list that was not recorded on its books but had an acquisition date fair value of $120,000 This intangible asset is being amortized over 20 years Gibson sold Keller land with a book value of $55,000 on January 2, 2017, for $110,000 Keller still holds this land at the end of the current year Keller regularly transfers inventory to Gibson In 2017, it shipped inventory costing $110,500 to Gibson at a price of $170,000 During 2018, intra entity shipments totaled $220,000, although the original cost to Keller was only $132,000 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 $40,000 at the end of 2018 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 $70,000 book value (cost of $160,000) to Keller for $120,000 instead of land, as the problem reports Assume that the building had a 10 year remaining life at the date of transfer Gibson Company $ (820,000) (520,000) Keller Company Sales Cost of goods sold Operating expenses Equity in earnings of Keller 520,000 120,000 (99,000 320,000 35,000 $ 279,000) (165,000) $ (1,136,000) (630,000) (165,000) 35,000 $ (1,290,000 $(760,000) 80,000 430,000 340,000 Net income Retained earnings, 1 1 18 Net income (above) Dividends declared (279,000) 125,000 Retained earnings, 12 31 18 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) $ 171,000 360,000 410,000 792,000 130,000 498,000 $ 2,361,000 410,000 320,000 $ 1,580,000 $ (461,000) $(380,000) Total assets Liabilities Common stock Additional paid in capital Retained earnings, 12 31 18 (610,000) (340,000) 0 (100,000) (1,290,000)(760,000) $ (2,361,000) $(1,580,000) Totalliabilities and equities

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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

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 $330,000. At the acquisition date, the fair value of the noncontrolling interest was $220,000 and Kellers book value was $430,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $120,000. This intangible asset is being amortized over 20 years.

Gibson sold Keller land with a book value of $55,000 on January 2, 2017, for $110,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2017, it shipped inventory costing $110,500 to Gibson at a price of $170,000. During 2018, intra-entity shipments totaled $220,000, although the original cost to Keller was only $132,000. 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 $40,000 at the end of 2018.

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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 $70,000 book value (cost of $160,000) to Keller for $120,000 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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Gibson Company $ (820,000) (520,000) Keller Company Sales Cost of goods sold Operating expenses Equity in earnings of Keller 520,000 120,000 (99,000 320,000 35,000 $ 279,000) (165,000) $ (1,136,000) (630,000) (165,000) 35,000 $ (1,290,000 $(760,000) 80,000 430,000 340,000 Net income Retained earnings, 1/1/18 Net income (above) Dividends declared (279,000) 125,000 Retained earnings, 12/31/18 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) $ 171,000 360,000 410,000 792,000 130,000 498,000 $ 2,361,000 410,000 320,000 $ 1,580,000 $ (461,000) $(380,000) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 (610,000) (340,000) 0 (100,000) (1,290,000)(760,000) $ (2,361,000) $(1,580,000) Totalliabilities and equities