Problem $5-31($Algo$)($LO $5-1,5-2,5-3,5-4,5-5,5-6,5-7)$

The individual financial statements for Abbey Company and Bellstar Company for the year ending December $31,2024,$ follow. Abbey acquired a $60$ percent interest in Bellstar on January $1,2023,$ in exchange for various considerations totaling $$300,000.$ At the acquisition date, the fair value of the noncontrolling interest was $$200,000$ and Bellstar$$s book value was $$390,000.$ Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition$-$date fair value of $$110,000.$ This intangible asset is being amortized over $20$ years. Abbey uses the partial equity method to account for its investment in Bellstar.

Abbey sold Bellstar land with a book value of $$50,000$ on January $2,2023,$ for $$100,000.$ Bellstar still holds this land at the end of the current year.

Bellstar regularly transfers inventory to Abbey. In $2023,$ it shipped inventory costing $$112,000$ to Abbey at a price of $$160,000.$ During $2024,$ intra$-$entity shipments totaled $$210,000,$ although the original cost to Bellstar was only $$136,500.$ In each of these years, $20$ percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $$30,000$ at the end of $2024.$

Items Abbey Company Bellstar Company

Sales $ $(810,000)$ $ $(510,000)$

Cost of goods sold $510,000310,000$

Operating expenses $110,00030,000$

Equity in earnings of Bellstar $(102,000)0$

Net income $ $(292,000)$ $ $(170,000)$

Retained earnings, $1/1/24$ $ $(1,126,000)$ $ $(625,000)$

Net income $($above$)(292,000)(170,000)$

Dividends declared $120,00030,000$

Retained earnings, $12/31/24$ $ $(1,298,000)$ $ $(765,000)$

Cash $ $170,000$ $ $70,000$

Accounts receivable $358,000420,000$

Inventory $400,000330,000$

Investment in Bellstar $771,0000$

Land $120,000400,000$

Buildings and equipment $($net$)497,000310,000$

Total assets $ $2,316,000$ $ $1,530,000$

Liabilities $ $(418,000)$ $ $(355,000)$

Common stock $(600,000)(330,000)$

Additional paid$-$in capital $0(80,000)$

Retained earnings, $12/31/24(1,298,000)(765,000)$

Total liabilities and equities $ $(2,316,000)$ $ $(1,530,000)$

Note: Parentheses indicate a credit balance.

Required:

Prepare a worksheet to consolidate the separate $2024$ financial statements for Abbey and Bellstar.

How would the consolidation entries in requirement $($a$)$ have differed if Abbey had sold a building on January $2,2023,$ with a $$65,000$ book value $($cost of $$150,000)$ to Bellstar for $$110,000$ instead of land, as the problem reports? Assume that the building had a $10-$year remaining life at the date of transfer.