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 $40,000 at the end of 2021.See individual statements attached. InstructionsPrepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller. GibsonKellerCompany$(1,050,000)750,000130,000(72,000)$ (242,000)Company$ (750,000)550,00080,000SalesCost of goods soldOperating expensesEquity in earnings of Keller$ (120,000)$ (745,000)(120,000)50,000Net incomeRetained earnings, 1/1/21Net income (above)$(1,366,000)(242,000)150,000Dividends declaredRetained earnings, 12/31/21$(1,458,000)$ (815,000)194,000406,000640,0001,119,000220,000521,000Cash$$80,000660,000570,000Accounts receivableInventoryInvestment in KellerLand640,000550,000$ 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 assetsLiabilitiesCommon stockAdditional paid-in capitalRetained earnings, 12/31/21(1,458,000)$(3,100,000)Total liabilities and equities Sales$ (1,050,000) $(750,000)Cost of goods soldOperating expenses750,000550,000130,00080,000Equity in earnings of Keller(72,000)Separate company net income$(242,000) $ (120,000)Consolidated net incomeTo noncontrolling interestTo Gibson CompanyRetained earnings, 1/1/21-GibsonRetained earnings, 1/1/21–KellerNet incomeDividends declared$ (1,366,000)(745,000)(242,000)(120,000)150,00050,000$ (1,458,000) (815,000)Retained earnings, 12/31/21CashAccounts receivable$194,000 $80,000406,000660,000Inventory640,000570,000Investment in KellerLand1,119,000220,000640,000Buildings and equipment (net)521,000550,000Customer list$ 3,100,000 $ 2,500,000(802,000) $ (985,000)Total assetsLiabilitiesCommon stockAdditional paid-in capitalRetained earnings, 12/31/21Noncontrolling interest 1/1/21Noncontrolling 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 $%24

Consolidated Financial Statement - In these type of financial statements includes assets,…

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $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

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 $
%24

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