The individual financial statements for Gibson Company and Keller Company for the year ending December 31,2013, follow. Gibson acquired a 60 percent interest in Keller on January 1,2012, 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, 2012, for $100,000. Keller still holds this land at the end of the current year.

Keller regularly transfers inventory to Gibson. In 2012, it shipped inventory costing $100,000 to Gibson at a price of $150,000. During 2013, 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 2013.

Gibson Company

Keller 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)

-0-

 Net income

$ (284,000)

$ (140,000)

Retained earnings, 1/1/13

$(1,116,000)

$ (620,000)

Net income (above)

(284,000)

(140,000)

Dividends paid

115,000

60,000

 Retained earnings, 12/31/13

$(1,285,000)

$ (700,000)

Cash

$ 177,000

$ 90,000

Accounts receivable

356,000

410,000

Inventory

440,000

320,000

Investment in Keller Company

726,000

-0-

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

-0-

(90,000)

Retained earnings, 12/31/13

(1,285,000)

(700,000)

 Total liabilities and equities

$(2,375,000)

$(1,510,000)

a. Prepare a worksheet to consolidate the separate 2013 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 of transfer.