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Document1- Word (Product Activation Failed) FILE HOME INSERT DESIGN PAGE LAYOUT REFERENCES MAILINGS REVIEW VIEW Sign in Navigation Search document HEADINGS PAGES RESULTS The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2015, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2014, in exchange for various considerations totalling $810,000. At the acquisition date, the fair value of the non-controlling interest was $540,000 and Keller's book value was $1,080,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $270,000. This intangible asset is being amortized over 20 years. Gibson sold Keller land with a book value of $85,000 on January 2, 2014, for $180,000 Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2014, it shipped inventory costing $208,000 to Gibson at a price of $320,000. During 2015, intra-entity shipments totalled $370,000, although the original cost to Keller was only $222,000. 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 $45,000 at the end of 2015. Create an interactive outline of your document. It's a great way to keep track of where you are or quickly move your content around To get started, go to the Home tab and apply Heading styles to the headings in your document. PAGE 1 OF 4 181 WORDS LENGLISH (INDIA) + 100% ENG 01:37 PM 04/02/2016 Search the web and Windows

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a Consideration transferred 810000 Noncontrolling interest fair value 540000 Subsidiary fair value at acquisition-date 1350000 Book value -1080000 Fair value in excess of book value 2430000 Excess fair value assignment to customer list 270000 Life : 20 yrs 20 yrs Annual Excess Amortizations 13500 CONSOLIDATION ENTRIES Entry *TL Retained Earnings (Gibson) 95000      Land 95000 To remove unrealized gain on Intercompany downstream transfer of land made in 2014 Entry *G Retained Earnings (Keller) 21333       Cost of Goods Sold 21333 To defer unrealized upstream Inventory gross profit from 2014 until 2015 computed as the 2014 ending inventory balance of $64,000 (20% ×$320,000) multiplied by 33-1/3% markup. Entry *C Retained earnings (Gibson) 18590        Investment in Keller 18590 Parent is applying the partial equity method as can be seen by the amount in the Income of Keller Company account (60 percent of the reported balance). Thus, the parent’s share of amortization of $5,790($100,000 divided by 20 years × 60%) must be recognized for the previous year 2014. In addition, the equity accrual recorded by the parent has been based on Keller's reported income. As shown in Entry *G,$21,333 of that reported income has not actually been realized as of January 1, 2015. Thus, the previous accrual must be reduced by $12,800 to mirror the parent's 60% ownership. The total of the two adjustments being made here is $18,590. Entry S Common Stock (Keller) 490000 Additional Paid-in Capital 90000 Retained earnings (Keller)   (adjusted for Entry *G) 683667      Investment in Keller (60%) 758200.2      Noncontrolling Interest in Keller (40%) 505466.8 To remove stockholders' equity accounts of Keller and recognize beginning noncontrolling interest. Retained earnings balance has been adjusted in Entry *G. Entry: A Customer List 256500     Investment in Keller 153900     Noncontrolling Interest in Keller (40%) 102600 To recognize amount paid within acquisition price for the customer list. Original balance is adjusted for previous year’s amortization. Entry: I Income of Keller 96000      Investment in Keller 96000 To eliminate intercompany income accrual. Entry D Investment in Keller 33000 Dividends Paid 33000 To eliminate intercompany dividend transfers—60% of subsidiary'spayment Entry E Amortization Expense 13500       Customer List 13500 To recognize current period excess amortization expense. Entry P Liabilities 45000     Accounts Receivable 45000 To eliminate intercompany debt. Entry Tl Sales 370000      Cost of Goods Sold 370000 To eliminate current year intercompany inventory transfer. Entry G Cost of Goods Sold 22,200      Inventory 22,200 To defer 2015 unrealized inventory gross profit. Unrealized gain is the ending inventory of $74,000 (20% of $370,000) multiplied by 30% mark-up Noncontrolling Interest in Keller's Net Income Keller reported net income 160000 Excess fair value amortization -13500 2014 Intercompany gross profit realized in 2015 (inventory) 21333 2015 Intercompany gross profit deferred (inventory) -22200 Keller realized income 2014 145633 Outside ownership percentage 40% Noncontrolling interest in Keller's net income 58253.2 Gibson & Keller Consolidated Worksheet Year Ending December 31, 2015 Consolidated Entries Accounts Gibson Keller Debit Credit Noncontrolling Interest Consolidated Totals Sales -970000 -670000 (TI) 370000 -1270000 Cost of Goods Sold 670000 470000 (G) 22,200 (*G+TI) 391333 770867 Operating Expenses 160000 40000 (E) 13500 213500 Equity in earnings of Kellar -96000 0 (I) 96000 0 Separate Company Net Income -236000 -160000 -285633 Consolidated Net Income      To Noncontrolling Interest 58253 58253      To Parent -227380 Retained Earnings- Gibson -1286000 (*TL+*C) 113590 -1172410 Retained Earnings- Keller -705000 (*G+S) 705000 0 Net Income -236000 -160000 -227379.8 Dividends Declared 110000 55000 (D) 33000 22000 110000 Retained Earnings -1412000 -810000 -1289790 Cash 186000 80000 266000 Accounts Receivable 390000 580000 (P) 45000 925000 Inventory 560000 490000 (G) 22200 1027800 Investment in Keller 996000 (D) 33000 (*C+S+I+A) 1026690 2309.8 Land 140000 560000 (*TL) 95000 605000 Buildings & Equipment 513000 470000 983000 Customer List (A) 256500 (E 13500 243000     Total Asset 2785000 2180000 4052109.8 Liabilities -613000 -790000 (P) 45000 -1358000 Common Stock -760000 -490000 (S) 490000 -760000 Additional Paid-in Capital -90000 (S) 90000 0 Retained Earnings -1412000 -810000 -1289790 NCI in Keller - 01/01/2015 (S) 505467 -505467 NCI in Keller - 12/31/2015 (A) 102600 -102600 -608067 -608066.8 Total Liabilities & Equities -2785000 -2180000 -4015857 b If the intercompany transfer had been a building rather than land, twoadjustments to the consolidation entries would be needed. Entry *TLwould be changed and relabeled as Entry *TA and an Entry ED would be added to eliminate the overstatement of depreciation expense for 2014.All other consolidation entries would be the same as shown in Part a.As a downstream transfer, entries *C and S are not affected. Entry *TA Retained Earnings (Gibson) 112500 Building 40000         Accumulated Depriciation 152500 To eliminate unrealized gain ($125,000 original amount less one year of excess depreciation at $12,500 per year) as of beginning of year.Entry also returns Buildings account to historical cost (from$ 270,000 to $310,000) and Accumulated Depreciation account to historical cost (original $165,000 less one year of excess depreciationat $12,500). Because the Buildings account is shown at net value inthe information given in this problem, the above entry wouldprobably be made as follows: Entry *TA (Alternative) Retained Earnings (Gibson) 112500       Building (Net) 112500 Entry ED Accumulated Depreciation 12500           Depreciation Expense 12500 To remove excess depreciation for current year created by transfer price

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