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, Sandin held merchandise sold to it from Panther for $20,000. During 2012, Panther sold merchandise to Sandin for $100,000. On December 31, 2012, Sandin held $25,000 of this merchandise in its inventory. Panther has a gross profit of 30%. Sandin owed Panther $15,000 on December 31 as a result of this intercompany sale. On January 1, 2011, Sandin sold equipment to Panther at a profit of $24,000. Panther also sold some fixed assets to nonaffiliates. Depreciation is computed over a 6-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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