Question

a. Prepare a worksheet to consolidate the separate 2021 financial statements for Gibson and Keller. b. How would the consolidation entries in requirement (a) have differed if Gibson had sold a building on January 2, 2020, with a $155,000 book value (cost of $330,000) to Keller for $290,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Complete this question by entering your answers in the tabs below.

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 $870,000. At the acquisition date, the fair value of the noncontrolling interest was $580,000 and Keller's book value was S1,160,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $290,000. This intangible asset is being amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller. 2 pons Gibson sold Keller land with a book value of S50,000 on January 2, 2020, for $120,000. Keller still holds this land at the end of the eBook Current year. Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $238,000 to Gibson at a price of $340,000. During 2021, intra-entity shipments totaled S390,000, although the original cost to Keller was only $253,500. 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 $55,000 at the end of 2021

Answer 1

Answer :

(1) Calculation of Dividend attributable to Non controlling Interest

Total dividend declared = 65,000

Dividend attributable to Gibson = 65,000 x 60% = 39,000

Dividend attributable to Non controlling Interest = 65,000 x 40% = 26,000

(2) Calculation of Net Income attributable to noncontrolling Interest

Keller's Net Income	$150,000
Less : Fair Value Amortization	($14,500)
2020 Intra entity gross profit recognized in 2018 on inventory (340,000 x 20% x 30%)	$20,400
2021 Intra entity gross profit deffered on inventory	($27,300)
Keller's realized Income	$128,600
Non controlling Interest percentage	40%
Net Income attributable to noncontrolling Interest	$51,440

(3) Calculation of Non controlling Interest on 1/1/21 :

Common stock of Keller as on 1/1/2020	$510,000
Additional Paid in capital	$70,000
Retained Earnings (715,000 - 20,400)	$694,600
Customer List	$275,500
Total	$1,550,100
Attributable to Gibson as on 1/1/2021	$930,060
Attributable to Non controlling Interest on 1/1/21	$620,040