Refer to the preceding facts for Panther s acquisition of Sandin
Refer to the preceding facts for Panther’s acquisition of Sandin common stock. On January 1, 2012, Panther held merchandise sold to it from Sandin for $12,000. This beginning inventory had an applicable gross profit of 25%. During 2012, Sandin sold merchandise to Panther for $75,000. On December 31, 2012, Panther held $18,000 of this merchandise in its inventory.
This ending inventory had an applicable gross profit of 30%. Panther owed Sandin $20,000 on December 31 as a result of this intercompany sale.
On January 1, 2012, Panther sold equipment with a book value of $35,000 to Sandin for $50,000. Panther also sold some fixed assets to nonaffiliates. During 2012, the equipment was used by Sandin. Depreciation is computed over a 5-year life, using the straight-line method.
1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Sandin.
2. Complete a consolidated worksheet for Panther Company and its subsidiary Sandin Company as of December 31, 2012. Prepare supporting amortization and income distribution schedules.
On January 1, 2011, Panther Company acquired Sandin Company. Panther paid $60 per share for 80% of Sandin’s common stock. The price paid by Panther reflected a control premium. The NCI shares were estimated to have a market value of $55 per share. On the date of acquisition, Sandin had the following balance sheet:
Buildings, which have a 20-year life, were understated by $120,000. Equipment, which has a 5-year life, was understated by $40,000. Any remaining excess was considered good-will. Panther used the simple equity method to account for its investment in Sandin.
Panther and Sandin had the following trial balances on December 31, 2012:
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