Refer to the preceding facts for Packard€™s acquisition of Stude common stock. On January 1, 2012, Packard held merchandise acquired from Stude for $10,000. This beginning inventory had an applicable gross profit of 25%. During 2012, Stude sold $40,000 worth of merchandise to Packard. Packard held $6,000 of this merchandise at December 31, 2012. This ending inventory had an applicable gross profit of 30%. Packard owed Stude $11,000 on December 31 as a result of this intercompany sale.
On January 1, 2012, Stude held merchandise acquired from Packard for $20,000. This beginning inventory had an applicable gross profit of 40%. During 2012, Packard sold $60,000 worth of merchandise to Stude. Stude held $30,000 of this merchandise at December 31, 2012. This ending inventory had an applicable gross profit of 35%. Stude owed Packard $23,000 on December 31 as a result of this intercompany sale.
Required
1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Stude.
2. Complete a consolidated worksheet for Packard Corporation and its subsidiary Stude Corporation as of December 31, 2012. Prepare supporting amortization and income distribution schedules.
On January 1, 2011, Packard Corporation acquired 70% of the common stock of Stude Corporation for $400,000. On this date, Stude had the following balance sheet:

Buildings, which have a 20-year life, were understated by $150,000. Equipment, which has a 5-year life, was understated by $60,000. The 3,000 NCI shares had a fair value of $50 each. Any remaining excess was considered to be goodwill. Packard used the simple equity method to account for its investment in Stude.
Packard and Stude had the following trial balances on December 31, 2012:

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Stude Corporation Balance Sheet January 1, 2011 Assets Liabilities and Equity Accounts receivable Inventory Land Buildings .. Accumulated depreciation Equipment Accumulated depreciation 60,000 Accounts payable 40,000 Bonds payable 60,000 Common stock ($1 par) 200,000 Paid-in capital in excess of par (50,000) Retained earnings 72,000 (30,000) 40,000 100,000 10,000 90,000 112,000 Total assets.. . $352,000 Totallaiiies and equity $352,000 Accumulated Depreciation Accumulated Depreciation Retained Earnings, January 1, 2012 Depreciation Expense-Buildings Depreciation Expense-Equipment.. Other Expenses... Subsidiary Income.... 2