The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2013, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2012, in exchange for various considerations totaling $570,000. At the acquisition date, the fair value of the noncontrolling interest was $380,000 and Keller's book value was $850,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisitiondate fair value of $100,000. This intangible asset is being amortized over 20 years.

Gibson sold Keller land with a book value of $60,000 on January 2, 2012, for $100,000.

Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2012, it shipped inventory costing $100,000 to Gibson at a price of $150,000. During 2013, intra-entity shipments totaled

$200,000, although the original cost to Keller was only $140,000. 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 2013.

a. Prepare a worksheet to consolidate the separate 2013 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 $60,000 book value (cost of $140,000) to Keller for $100,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.

Transcribed Image Text:

Gibson Company Income of Keller Company Retained earnings, 1/1/13 Retained earnings, 12/31/13 Buildings and equipment (net) Total assets $ (480,000) 400,000) Additional paid-in capital Retained earnings, 12/31/13 Total liabilities and equities