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

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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.

      Gibson Keller
      Company Company
Sales $     (800,000) $     (500,000)
Cost of goods sold        500,000        300,000
Operating expenses        100,000          60,000
Income of Keller Company        (84,000)                  -
Net income $     (284,000) $     (140,000)
     
Retained earnings, 1/1/18 $ (1,116,000) $   (620,000)
Net income      (284,000)      (140,000)
Dividends paid        115,000          60,000
Retained earnings, 12/31/18 $ (1,285,000) $     (700,000)
     
Cash $     177,000 $       90,000
Accounts receivable        316,000        410,000
Inventory        440,000        320,000
Investment in Keller Company        766,000                  -
Land        180,000        390,000
Buildings and equipment (net)        496,000        300,000
Total assets $   2,375,000 $   1,510,000
     
Liabilities $   (480,000) $   (400,000)
Common stock      (610,000)      (320,000)
Additional paid-in capital                  -        (90,000)
Retained earnings, 12/31/18    (1,285,000)      (700,000)
Total liabilities and equities $ (2,375,000) $ (1,510,000)

 

  1. Prepare a worksheet to consolidate the separate 2018 financial statements for Gibson and Keller. (an explanation or supporting calculations for the S, A,I,D, and E entries would be very helpful)

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