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
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) |
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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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