This assignment from the book "Advanced Accounting Hoyle, 12th ed., Chapter # 5" All the assignment in the uploaded file.

The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2015, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2014, in exchange for various considerations totaling $990,000. At the acquisition date, the fair value of the noncontrolling interest was $660,000 and Keller's book value was $1,320,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $330,000. This intangible asset is being amortized over 20 years. Gibson sold Keller land with a book value of $70,000 on January 2, 2014, for $160,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2014, it shipped inventory costing $247,000 to Gibson at a price of $380,000. During 2015, intra-entity shipments totaled $430,000, although the original cost to Keller was only $258,000. 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 $30,000 at the end of 2015 Gibson Company Sales Cost of goods sold Operating expenses Equity in earnings of Keller Company Net income Retained earnings, 1/1/15 Net income (above) Dividends declared Retaine d earnings, 12/31/15 Cash Accounts receivable Inventory Investment in Keller Company Land Buildings and equipment (net) Keller Company $ (1,030,000) $ 730,000 (730,000) 530,000 70,000 110,000 ) 0 (78,000 $ ) (268,000 $ $ ) (1,346,000 (130,000 $ (735,000 ) (268,000 ) (130,000 ) (825,000 $ (1,474,000 $ $ 192,000 $ 620,000 ) 90,000 640,000 550,000 0 1,065,000 200,000 519,000 ) 40,000 140,000 402,000 ) 620,000 530,000 Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/15 $ $ 2,998,000 (704,000) ) (820,000 $ $ 2,430,000 (985,000) (550,000 ) (70,000 0 ) ) (825,000 (1,474,000 Total ) liabilities $ (2,998,000 and equities (Note: Parentheses indicate a credit balance.) ) (2,430,000 $ ) a. Prepare a worksheet to consolidate the separate 2015 financial statements for Gibson and Keller. (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.) b. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building with a $175,000 book value (cost of $370,000) to Keller for $330,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Use these transactions Step 1 Consideration Transferred Non controlling interest fair value Fair value at acquisition date Subsidiary Book Value Excess Fair Value over book value 990,000 660,000 1,650,000 1,320,000 330,000 Step 2 Annual Excess Amortization=330,000/20years=16,500 annual excess amortization Step 4 2014 Gross profit Rate= 380,000-247,000/380,000=0.35 or 35% Step 5 2015 Gross profit Rate= 430,000-258,000/430,000=0.4 or 40% Step 6 Unrealized Gross profit for 2014 and 2015 Account 2014 2015 Sale 380,000 430,000 Remaining Percentage 20% 20% Inventory Remaining 76,000 86,000 Gross Profit Rate 35% 40% Unrealized Cross Profit 26,600 34,400 Step 8Entry TL Unrealized land gain=160,000-70,000=90,000 12/13/2015 Retained Earnings land 90,000 Step 9 Entry*G Entry G, the unrealized upstream inventory intra entity transfer from 2014 12/31/2015 Retained Earnings 1/1/15 26,600 Cost of Goods sold 90,000 26,600 Step 10 Entry *C Entry C, Calculate the ownership amount of the annual excess amortization Amortization=16,500*60%=9,900 Step 11 Calculate the parent company's ownership of subsidiary's beginning retained earnings. R/E=26,600*60%=15,960 Step 12 Calculate the amount to be reported for the parent's beginning retained earnings. Parent R/E=15,960+9,900=25,860 Step 13 12/31/2015 Retained Earnings, 1/1/2015 25,860 Investment in K. Company 25,860 Step 14 Entry S, Calculate the realized amounts Realized R/E, 1/1/15=735,000(subsidiary beginning retained earnings)-adjusted amount 26,600=708,400 Step 15 Calculate the total amount of stockholders' equity to be allocated. Total Equity=(Inventory Keller Com.+ Cash+ retained earnings) 550,000+70,000 +708,400=1,328,400 Step 16 Calculate the amount to be allocated to the investment in K. Company. Investment= 1,328,400*60%=797,040 Step 17 Calculate the amount to be allocated to the Non controlling interest in K. Company NCI=1,328,400*40%=531,360 Step 18 12/31/2015 Common Stock 550,000 APIC 70,000 Retained Earnings 1/1/15 708,400 Investment in K. Company 797,040 NCI in K. Company 531,360 Step 19 For Entry A, Calculate the unamortized amount of the customer list Unamortized List=330,000-16,500=313,500 Step 20 Calculate the amount allocated to the Investment in K.Company Investment= 313,500*60%=188,100 Calculate the amount allocated to the Non controlling interest in K.Company NCI=313,500*40%=125,400 Step 22 Entry I 12/31/2015 Income of K company 78,000 Investment in K company 78,000 Step 23 For Entry D, In order to eliminate the dividends, the parent's share of the payment must be determined. Dividends= 40,000*60%=24,000 Step 24 Step 25 For Entry E, journal entry 12/31/2015 Amortization expense Customer list 16,500 16,500 Step 26 For Entry P, this amount is eliminated on the worksheet, as the subsidiary is being acquired. Journal entry P. 12/31/2015 Liabilities 30,000 Account Receivable 30,000 Step 27 Entry TI, Journal Entry 12/31/2015 Sales Cost of goods sold Step 28, Entry G 12/31/2015 Cost of goods sold Inventory K Company report N/I Excess fair value amortization 2014 intra entry gross profit 2015 intra entry gross profit Realized 2015 income NCI persentage NCI in subsidiary's N/I 430,000 430,000 34,400 34,400 130,000 16,500 26,600 34,400 105,700 40% 42,280 Step 31 Building Value = 330,000-175,000=155,000 Step 32 Annual Depreciation= 155,000/10 years life span=15,500 Step 33 Unrealized Gain= 155,000-15,500=139,500 Step 34 Historical Cost=370,000-175,000=195,000 Step 35 Accumulated Depreciation=195,000-15,500=179,500 (130,000-16,500+26,600-34,400) Step 1 Consideration Transferred Non controlling interest fair value Fair value at acquisition date Subsidiary Book Value Excess Fair Value over book value 990,000 660,000 1,650,000 1,320,000 330,000 Step 2 Annual Excess Amortization=330,000/20years=16,500 annual excess amortization Step 4 2014 Gross profit Rate= 380,000-247,000/380,000=0.35 or 35% Step 5 2015 Gross profit Rate= 430,000-258,000/430,000=0.4 or 40% Step 6 Unrealized Gross profit for 2014 and 2015 Account 2014 2015 Sale 380,000 430,000 Remaining Percentage 20% 20% Inventory Remaining 76,000 86,000 Gross Profit Rate 35% 40% Unrealized Cross Profit 26,600 34,400 Step 8Entry TL Unrealized land gain=160,000-70,000=90,000 12/13/2015 Retained Earnings land 90,000 Step 9 Entry*G Entry G, the unrealized upstream inventory intra entity transfer from 2014 12/31/2015 Retained Earnings 1/1/15 26,600 Cost of Goods sold 90,000 26,600 Step 10 Entry *C Entry C, Calculate the ownership amount of the annual excess amortization Amortization=16,500*60%=9,900 Step 11 Calculate the parent company's ownership of subsidiary's beginning retained earnings. R/E=26,600*60%=15,960 Step 12 Calculate the amount to be reported for the parent's beginning retained earnings. Parent R/E=15,960+9,900=25,860 Step 13 12/31/2015 Retained Earnings, 1/1/2015 25,860 Investment in K. Company 25,860 Step 14 Entry S, Calculate the realized amounts Realized R/E, 1/1/15=735,000(subsidiary beginning retained earnings)-adjusted amount 26,600=708,400 Step 15 Calculate the total amount of stockholders' equity to be allocated. Total Equity=(Inventory Keller Com.+ Cash+ retained earnings) 550,000+70,000 +708,400=1,328,400 Step 16 Calculate the amount to be allocated to the investment in K. Company. Investment= 1,328,400*60%=797,040 Step 17 Calculate the amount to be allocated to the Non controlling interest in K. Company NCI=1,328,400*40%=531,360 Step 18 12/31/2015 Common Stock 550,000 APIC 70,000 Retained Earnings 1/1/15 708,400 Investment in K. Company 797,040 NCI in K. Company 531,360 Step 19 For Entry A, Calculate the unamortized amount of the customer list Unamortized List=330,000-16,500=313,500 Step 20 Calculate the amount allocated to the Investment in K.Company Investment= 313,500*60%=188,100 Calculate the amount allocated to the Non controlling interest in K.Company NCI=313,500*40%=125,400 Step 22 Entry I 12/31/2015 Income of K company 78,000 Investment in K company 78,000 Step 23 For Entry D, In order to eliminate the dividends, the parent's share of the payment must be determined. Dividends= 40,000*60%=24,000 Step 24 Step 25 For Entry E, journal entry 12/31/2015 Amortization expense Customer list 16,500 16,500 Step 26 For Entry P, this amount is eliminated on the worksheet, as the subsidiary is being acquired. Journal entry P. 12/31/2015 Liabilities 30,000 Account Receivable 30,000 Step 27 Entry TI, Journal Entry 12/31/2015 Sales Cost of goods sold Step 28, Entry G 12/31/2015 Cost of goods sold Inventory K Company report N/I Excess fair value amortization 2014 intra entry gross profit 2015 intra entry gross profit Realized 2015 income NCI persentage NCI in subsidiary's N/I 430,000 430,000 34,400 34,400 130,000 16,500 26,600 34,400 105,700 40% 42,280 Step 31 Building Value = 330,000-175,000=155,000 Step 32 Annual Depreciation= 155,000/10 years life span=15,500 Step 33 Unrealized Gain= 155,000-15,500=139,500 Step 34 Historical Cost=370,000-175,000=195,000 Step 35 Accumulated Depreciation=195,000-15,500=179,500 (130,000-16,500+26,600-34,400)