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 $1,050,000. At the acquisition date, the fair value of the noncontrolling interest was $700,000 and Keller’s book value was $1,400,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $350,000. 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 $80,000 on January 2, 2020, for $180,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $280,000 to Gibson at a price of $400,000. During 2021, intra-entity shipments totaled $450,000, although the original cost to Keller was only $292,500. 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 2021. See individual statements attached. Instructions Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller.
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 $1,050,000. At the acquisition date, the fair value of the noncontrolling interest was $700,000 and Keller’s book value was $1,400,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $350,000. 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 $80,000 on January 2, 2020, for $180,000. Keller still holds this land at the end of the current year.
Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $280,000 to Gibson at a price of $400,000. During 2021, intra-entity shipments totaled $450,000, although the original cost to Keller was only $292,500. 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 2021.
See individual statements attached.
Instructions
Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller.
![Gibson
Keller
Company
$(1,050,000)
750,000
130,000
(72,000)
$ (242,000)
Company
$ (750,000)
550,000
80,000
Sales
Cost of goods sold
Operating expenses
Equity in earnings of Keller
$ (120,000)
$ (745,000)
(120,000)
50,000
Net income
Retained earnings, 1/1/21
Net income (above)
$(1,366,000)
(242,000)
150,000
Dividends declared
Retained earnings, 12/31/21
$(1,458,000)
$ (815,000)
194,000
406,000
640,000
1,119,000
220,000
521,000
Cash
$
$
80,000
660,000
570,000
Accounts receivable
Inventory
Investment in Keller
Land
640,000
550,000
$ 2,500,000
$ (985,000)
(610,000)
(90,000)
(815,000)
$(2,500,000)
Buildings and equipment (net)
$ 3,100,000
$ (802,000)
(840,000)
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/21
(1,458,000)
$(3,100,000)
Total liabilities and equities](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffcd9c704-f192-4165-ae0a-8ee762f74c0c%2F86c9e916-272c-40c2-b9af-e7c065ebb02e%2F61y6kyi_processed.png&w=3840&q=75)
![Sales
$ (1,050,000) $
(750,000)
Cost of goods sold
Operating expenses
750,000
550,000
130,000
80,000
Equity in earnings of Keller
(72,000)
Separate company net income
$
(242,000) $ (120,000)
Consolidated net income
To noncontrolling interest
To Gibson Company
Retained earnings, 1/1/21-Gibson
Retained earnings, 1/1/21–Keller
Net income
Dividends declared
$ (1,366,000)
(745,000)
(242,000)
(120,000)
150,000
50,000
$ (1,458,000) (815,000)
Retained earnings, 12/31/21
Cash
Accounts receivable
$
194,000 $
80,000
406,000
660,000
Inventory
640,000
570,000
Investment in Keller
Land
1,119,000
220,000
640,000
Buildings and equipment (net)
521,000
550,000
Customer list
$ 3,100,000 $ 2,500,000
(802,000) $ (985,000)
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings, 12/31/21
Noncontrolling interest 1/1/21
Noncontrolling interest 12/31/21
$
(840,000)
(610,000)
(90,000)
(1,458,000)
(815,000)
Total liabilities and equity
$ (3,100,000) $ (2,500,000) $
O $
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