P05-19

Problem 5-19

a.)

What is the noncontrolling interest's share of Rockne's 2013 income?

b.)

Prepare Doone's 2013 consolidation entries required by the intra-entity inventory transfers.

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ty inventory transfers.

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Student Name:
Class:

Problem 05-35
Part A.
Life in
years
Consideration transferred
Noncontrolling interest fair value
Subsidiary fair value at acquisition-date
Book value
Fair value in excess of book value
Excess fair value assignment to customer list

Consolidation entries:
Entry

Entry

Entry

Entry

Entry

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Annual
Excess

Amort.

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Entry

Entry

Entry

Entry

Entry

Entry

Noncontrolling interest in Keller's net income

Keller reported net income
Excess fair value amortization
2012 intra-entity gross profit realized in 2013
2013 intra-entity gross profit deferred
Keller realized income 2013
Outside ownership percentage
Noncontrolling interest in Keller's net income

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GIBSON AND KELLER
Consolidation Worksheet
Year Ending December 31, 2013

Consolidation Entries
Accounts
Sales

Gibson

Keller

Debit

(800,000)

(500,000)

Cost of goods sold

500,000

300,000

Operating expenses

100,000

60,000

Income of Keller

(84,000)

Separate company net income

(284,000)

(140,000)

Consolidated net income

To noncontrolling interest

To parent
Retained earnings, 1/1/13
- Gibson

(1,116,000)

- Keller
Net Income
Dividends
Retained earnings, 12/31/13

(620,000)
(284,000)

(140,000)

115,000

60,000

(1,285,000)

(700,000)

Cash

177,000

90,000

Accounts receivable

356,000

410,000

Inventory

440,000

320,000

Investment in Keller

726,000

Land

180,000

390,000

Buildings and equipment (net)

496,000

300,000

2,375,000

1,510,000

Liabilities

(480,000)

(400,000)

Common stock

(610,000)

(320,000)

(1,285,000)

(700,000)

(2,375,000)

(1,510,000)

Customer list
Total assets

Additional paid-in capital

Retained earnings, 12/31/13

(90,000)

Noncontrolling interest in
Keller, 1/1/13
Noncontrolling interest in
Keller, 12/31/13
Total liabilities and equity

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Credit

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Part b. How would the consolidation entries in requirement (a) have differed if Gibson
had sold a building with a $600,000 book value (cost of $140,000) to Keller for $100,000 instead of
land, as the problem reports?

Entry

Entry

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Noncontrolling

Consolidated

Interest

Totals

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0 instead of

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Given P05-35
Given Data P05-35
Part a. facts:
Gibson acquired interest in Keller 1/1/2012
Various considerations given for acquisition
Fair value of noncontrolling interest at acquisition
Keller's book value
Value assigned to Keller customer list
Keller customer list - life for purposes of amortization
Book value of land Gibson sold to Keller on 1/2/2012
Price paid by Keller for Gibson's land
Cost of inventory shipped by Keller to Gibson in 2012
Price paid by Gibson for 2012 inventory
Cost of intra-entity shipments by Keller to Gibson in 2013
Price paid by Gibson for 2013 intra-entity shipments
Percentage of inventory resold in period following transfer
Amount Gibson owes Keller at end of 2013
Part b. facts:
Building sold to Keller instead of land
Book value of building Gibson sold to Keller
Price paid by Keller for Gibson building
Cost of building
Remaining life at date of transfer

$
$
$
$
$
$
$
$
$
$
$

$
$
$

60%
570,000
380,000
850,000
100,000
20
60,000
100,000
100,000
150,000
140,000
200,000
20%
40,000

60,000
100,000
140,000
10

Sales
Cost of goods sold
Operating expenses
Income of Keller Company
Net income

Gibson
Keller
Company
Company
$ (800,000) $ (500,000)
500,000
300,000
100,000
60,000
(84,000)
$ (284,000) $ (140,000)

Retained earnings, 1/1/13

Net income
Dividends paid
Retained earnings, 12/31/13

$ (1,116,000) $
(284,000)
115,000
$ (1,285,000) $

Cash
Accounts receivable
Inventory
Investment in Keller Company
Land
Buildings and equipment (net)
Total assets

Liabilities
Common stock
Additional paid-in capital

(480,000) $
(610,000)
-

177,000
316,000
440,000
766,000
180,000
496,000
$ 2,375,000

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(620,000)
(140,000)
60,000
(700,000)

90,000
410,000
320,000
390,000
300,000
$ 1,510,000
(400,000)
(320,000)
(90,000)

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Retained earnings, 12/31/13
Total liabilities and equities

(1,285,000)
(700,000)
$ (2,375,000) $ (1,510,000)

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