ould the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a 00 book value (cost of $290,000) to Keller for $250,000 instead of land, as the problem reports? Assume that the had a 10-year remaining life at the date of transfer. (Do not round intermediate calculations. If no entry is required ansaction/event, select "No journal entry required" in the first account field.) Transaction 1 2 Retained earnings Buildings Accumulated depreciation Accumulated depreciation Operating expenses Accounts Debit 138,300 X 40,000 11,000 Credit 153,900 11,000 Show less
ould the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a 00 book value (cost of $290,000) to Keller for $250,000 instead of land, as the problem reports? Assume that the had a 10-year remaining life at the date of transfer. (Do not round intermediate calculations. If no entry is required ansaction/event, select "No journal entry required" in the first account field.) Transaction 1 2 Retained earnings Buildings Accumulated depreciation Accumulated depreciation Operating expenses Accounts Debit 138,300 X 40,000 11,000 Credit 153,900 11,000 Show less
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
Related questions
Question
![The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2021, follow. Gibson
acquired a 60 percent interest in Keller on January 1, 2020, in exchange for various considerations totaling $750,000. At the
acquisition date, the fair value of the noncontrolling interest was $500,000 and Keller's book value was $1,000,000. Keller had
developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $250,000. This
intangible asset is being amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller.
Gibson sold Keller land with a book value of $75,000 on January 2, 2020, for $160,000. Keller still holds this land at the end of the
current year.
Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $180,000 to Gibson at a price of $300,000. During
2021, intra-entity shipments totaled $350,000, although the original cost to Keller was only $245,000. 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 $35,000 at the
end of 2021.
Sales
Cost of goods sold
Operating expenses
Equity in earnings of Keller.
Net income
Retained earnings, 1/1/21
Net income (above)
Dividends declared
Retained earnings, 12/31/21
Cash
Accounts receivable
Inventory
Investment in Keller.
Land
Buildings and equipment (net)
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/21
Total liabilities and equities
(Note: Parentheses indicate credit balance.)
Gibson
Company
$ (950,000) $
650,000
140,000
(102,000)
$ (262,000)
$(1,266,000) $
(262,000)
145,000
$(1,383,000)
$ 184,000
386,000
540,000
966,000
120,000
511,000
$ 2,707,000
$
$
$
(1,383,000)
$(2,707,000)
Keller
Company
(584,000) $
(740,000)
0
(650,000)
450,000
30,000
0
(170,000)
(695,000)
(170,000)
45,000
(820,000)
60,000
560,000
470,000
0
540,000
450,000
$ 2,080,000
(720,000)
(470,000)
(70,000)
(820,000)
$(2,080,000)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aff2365-9f44-4770-b8e3-e2ed0988bbf7%2F953eeb6a-fe08-45f8-9f2b-26e9886f19dd%2Fob4x06_processed.png&w=3840&q=75)
Transcribed Image Text:The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2021, follow. Gibson
acquired a 60 percent interest in Keller on January 1, 2020, in exchange for various considerations totaling $750,000. At the
acquisition date, the fair value of the noncontrolling interest was $500,000 and Keller's book value was $1,000,000. Keller had
developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $250,000. This
intangible asset is being amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller.
Gibson sold Keller land with a book value of $75,000 on January 2, 2020, for $160,000. Keller still holds this land at the end of the
current year.
Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $180,000 to Gibson at a price of $300,000. During
2021, intra-entity shipments totaled $350,000, although the original cost to Keller was only $245,000. 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 $35,000 at the
end of 2021.
Sales
Cost of goods sold
Operating expenses
Equity in earnings of Keller.
Net income
Retained earnings, 1/1/21
Net income (above)
Dividends declared
Retained earnings, 12/31/21
Cash
Accounts receivable
Inventory
Investment in Keller.
Land
Buildings and equipment (net)
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/21
Total liabilities and equities
(Note: Parentheses indicate credit balance.)
Gibson
Company
$ (950,000) $
650,000
140,000
(102,000)
$ (262,000)
$(1,266,000) $
(262,000)
145,000
$(1,383,000)
$ 184,000
386,000
540,000
966,000
120,000
511,000
$ 2,707,000
$
$
$
(1,383,000)
$(2,707,000)
Keller
Company
(584,000) $
(740,000)
0
(650,000)
450,000
30,000
0
(170,000)
(695,000)
(170,000)
45,000
(820,000)
60,000
560,000
470,000
0
540,000
450,000
$ 2,080,000
(720,000)
(470,000)
(70,000)
(820,000)
$(2,080,000)
![How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a
$135,000 book value (cost of $290,000) to Keller for $250,000 instead of land, as the problem reports? Assume that the
building had a 10-year remaining life at the date of transfer. (Do not round intermediate calculations. If no entry is required
for a transaction/event, select "No journal entry required" in the first account field.)
Show less
No
1
2
Transaction
1
2
Retained earnings
Buildings
Accumulated depreciation
Accumulated depreciation
Operating expenses
Accounts
Debit
138,300
40,000
11,000
Credit
153,900
11,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aff2365-9f44-4770-b8e3-e2ed0988bbf7%2F953eeb6a-fe08-45f8-9f2b-26e9886f19dd%2F09v0fhv_processed.png&w=3840&q=75)
Transcribed Image Text:How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a
$135,000 book value (cost of $290,000) to Keller for $250,000 instead of land, as the problem reports? Assume that the
building had a 10-year remaining life at the date of transfer. (Do not round intermediate calculations. If no entry is required
for a transaction/event, select "No journal entry required" in the first account field.)
Show less
No
1
2
Transaction
1
2
Retained earnings
Buildings
Accumulated depreciation
Accumulated depreciation
Operating expenses
Accounts
Debit
138,300
40,000
11,000
Credit
153,900
11,000
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