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

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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 Keller on January 1, 2017, 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 acquisition-date 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, 2017, for $100,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2017, it shipped inventory costing $100,000 to Gibson at a price of $150,000. During 2018, 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 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 $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.

Gibson Company $ (800,000) Keller Company (500,000) 300,000 Sales Cost of goods sold Operating expenses Equity in earnings of Keller 500,000 100,000 60,000 84 Net income $ (284,000) (140,000) $(1,116,000) Retained earnings, 1/1/18 Net income (above) Dividends declared (284,000) 115,000 (620,000) (140,000) 60,000 $ 700,000 $ 90,000 410,000 320,000 Retained earnings, 12/31/18 1,285 Cash Accounts receivable Inventory Investment in Keller Land Buildings and equipment (net) $ 177,000 356,000 440,000 726,000 180,000 496,000 390,000 300,000 $1,510,000 Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 $2,375,000 $ (480,000) (400,000) (320,000) (90,000) (1.285,000) 700,000) (610,000) Total liabilities and equities $(2.375 1,510,0