The individual financial statements for Gibson Company and Keller Company

The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2011, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2010, 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, 2010, for $100,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2010, it shipped inventory costing $100,000 to Gibson at a price of $150,000. During 2011, 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 2011.

The individual financial statements for Gibson Company and Keller Company

a. Prepare a worksheet to consolidate the separate 2011 financial statements for Gibson and Keller.
b. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building with a $60,000 book value (cost of $140,000) to Keller for $100,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date oftransfer.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

Members

  • Access to 2 Million+ Textbook solutions
  • Ask any question from 24/7 available
    Tutors
$9.99
VIEW SOLUTION

OR

Non-Members

Get help from Accounting Tutors
Ask questions directly from Qualified Online Accounting Tutors .
Best for online homework assistance.