The individual financial statements for Scarlet Company and White Company for the year ending December 31, 2018, follow. Scarlet acquired a 60 percent interest in White on January 1, 2017, in exchange for various considerations totaling $660,000. At the acquisition date, the fair value of the noncontrolling interest was $440,000 and Whites book value was $880,000. White had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $220,000. This intangible asset is being amortized over 20 years.

Scarlet sold White land with a book value of $60,000 on January 2, 2017, for $130,000. White still holds this land at the end of the current year. White regularly transfers inventory to Scarlet. In 2017, it shipped inventory costing $162,000 to Scarlet at a price of $270,000. During 2018, intra-entity shipments totaled $320,000, although the original cost to White was only $224,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Scarlet owes White $65,000 at the end of 2018.

(Note: Parentheses indicate a credit balance.) a. Prepare a worksheet to consolidate the separate 2018 financial statements for Scarlet andWhite. b. Prepare US GAAP compliant Balance Sheet and Income Statement as of December 31, 2018, and for the year then ended. c. How would the consolidation entries in requirement (a) have differed if Scarlet had sold a building with a $120,000 book value (cost of $260,000) . Provide journal entries; do not make a new worksheet or FS to White for $220,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Provide journal entries; do not make a new worksheet or FS.

Scarlet Company White Company 12/31/2018 (920,000) 620,000 110,000 (69,000 (259,000) (1,236,000) (259,000) 130,000 $(1,365,000) 181,000 380,000 510,000 903,000 230,000 508,000 2.712,000 s(637,000) (710,000) 0 1,365,000 Sales Cost of goods sold Operating expenses Equity in earnings of Keller 12/31/2018 (620,000) 420,000 85,000 0 (115,000) 259000 Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 (680,000) (115,000) 30,000 (765,000) 80,000 530,000 440,000 0 510,000 420,000 $1.980,000 $(695,000) (440,000) (80,000) (765,000) Total liabilities and equities(2,712,000)$(1,980,000) Scarlet Company White Company 12/31/2018 (920,000) 620,000 110,000 (69,000 (259,000) (1,236,000) (259,000) 130,000 $(1,365,000) 181,000 380,000 510,000 903,000 230,000 508,000 2.712,000 s(637,000) (710,000) 0 1,365,000 Sales Cost of goods sold Operating expenses Equity in earnings of Keller 12/31/2018 (620,000) 420,000 85,000 0 (115,000) 259000 Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 (680,000) (115,000) 30,000 (765,000) 80,000 530,000 440,000 0 510,000 420,000 $1.980,000 $(695,000) (440,000) (80,000) (765,000) Total liabilities and equities(2,712,000)$(1,980,000)