On January 1, 2017, Panther, Inc., issued securities with a total fair value of $608,000 for...

  
 

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On January 1, 2017, Panther, Inc., issued securities with a total fair value of $608,000 for 100 percent of Stark Corporation's outstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies with production scheduling and product development with this combination. Although Stark's book value at the acquisition date was $330,000, the fair value of its trademarks was assessed to be $65,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $213,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2017, Stark sold Panther inventory costing $97,500 for $195,000. As of December 31, 2017, Panther had resold 65 percent of this inventory. In 2018, Panther bought from Stark $169,000 of inventory that had an original cost of $84,500. At the end of 2018, Panther held $45,600 (transfer price) of inventory acquired from Stark, all from its 2018 purchases. During 2018, Panther sold Stark a parcel of land for $106,100 and recorded a gain of $18,900 on the sale. Stark still owes Panther $73,600 (current liability) related to the land sale. At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation. Stark Panther, Inc. ( 843,000) 362,600 198,500 (18,900) (62,600) Corporation $ (386, 000) 202,500 86,700 Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings $ (96,800) $ (314,300) (96,800) 35,000 Net income (363,400) Retained earnings 1/1/18 (376,500) (363,400) 99,300 Net income Dividends declared Retained earnings 12/31/18 (640,600) $ (376,100) 184,000 131,000 Cash and receivables $ Inventory Investment in Stark Trademarks 132,000 402,000 771,000 Land, buildings, and equip. (net) Patented technology 69,000 333,000 148,600 825,400 Total assets 2,130,400 865,600 $ (277,650) (170,000) (41,850) (376,100) $ (865,600) Liabilities Cormon stock Additional paid-in capital Retained earnings 12/31/18 (764,600) (400,000) (325,200) (640,600) $ (2,130,400) Total liabilities and equity a. Show how Panther computed its $62,600 equity in Stark's earnings balance. b. Prepare a 2018 consolidated worksheet for Panther and Stark. Complete this question by entering your answers in the tabs below. Required A Required B Show how Panther computed its $62,600 equity in Stark's earnings balance. Equity in Stark's earnings < Required A Required B > Required A Required B Prepare a 2018 consolidated worksheet for Panther and Stark. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Show lessA PANTHER AND STARK Consolidation Worksheet Year Ending December 31, 2018 Consolidation Entries Consolidated Accounts Panther Stark Debit Сredit Totals Revenues $ (843,000) $ (386,000) Cost of goods sold 362,600 202,500 Other operating expenses 198,500 86,700 Gain on sale of land (18,900) Equity in Stark's earnings (62,600) Net income $ (363,400) $ (96,800) $ Retained earnings 1/1. $ (376,500) $ (314,300) Net income (above) (363,400) (96,800) Dividends declared 99,300 35,000 Retained earnings 12/31 $ (640,600) $ (376,100) $ Cash and receivables $ 132,000 $ 184,000 Inventory 402,000 131,000 Investment in Stark 771,000 Trademarks 69,000 Land, buildings, and equipment (net) 825,400 333,000 Patented technology 148,600 Total assets $ 2,130,400 $ 865,600 $ Liabilities $ (764,600) $ (277,650) Common stock (400,000) (170,000) Additional paid-in capital (325,200) (41,850) Retained earnings (above) (640,600) (376,100) Total liabilities & stockholders' equity $ (865,600) (2,130,400) < Required A Required B On January 1, 2017, Panther, Inc., issued securities with a total fair value of $608,000 for 100 percent of Stark Corporation's outstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies with production scheduling and product development with this combination. Although Stark's book value at the acquisition date was $330,000, the fair value of its trademarks was assessed to be $65,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $213,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2017, Stark sold Panther inventory costing $97,500 for $195,000. As of December 31, 2017, Panther had resold 65 percent of this inventory. In 2018, Panther bought from Stark $169,000 of inventory that had an original cost of $84,500. At the end of 2018, Panther held $45,600 (transfer price) of inventory acquired from Stark, all from its 2018 purchases. During 2018, Panther sold Stark a parcel of land for $106,100 and recorded a gain of $18,900 on the sale. Stark still owes Panther $73,600 (current liability) related to the land sale. At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation. Stark Panther, Inc. ( 843,000) 362,600 198,500 (18,900) (62,600) Corporation $ (386, 000) 202,500 86,700 Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings $ (96,800) $ (314,300) (96,800) 35,000 Net income (363,400) Retained earnings 1/1/18 (376,500) (363,400) 99,300 Net income Dividends declared Retained earnings 12/31/18 (640,600) $ (376,100) 184,000 131,000 Cash and receivables $ Inventory Investment in Stark Trademarks 132,000 402,000 771,000 Land, buildings, and equip. (net) Patented technology 69,000 333,000 148,600 825,400 Total assets 2,130,400 865,600 $ (277,650) (170,000) (41,850) (376,100) $ (865,600) Liabilities Cormon stock Additional paid-in capital Retained earnings 12/31/18 (764,600) (400,000) (325,200) (640,600) $ (2,130,400) Total liabilities and equity a. Show how Panther computed its $62,600 equity in Stark's earnings balance. b. Prepare a 2018 consolidated worksheet for Panther and Stark. Complete this question by entering your answers in the tabs below. Required A Required B Show how Panther computed its $62,600 equity in Stark's earnings balance. Equity in Stark's earnings < Required A Required B > Required A Required B Prepare a 2018 consolidated worksheet for Panther and Stark. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Show lessA PANTHER AND STARK Consolidation Worksheet Year Ending December 31, 2018 Consolidation Entries Consolidated Accounts Panther Stark Debit Сredit Totals Revenues $ (843,000) $ (386,000) Cost of goods sold 362,600 202,500 Other operating expenses 198,500 86,700 Gain on sale of land (18,900) Equity in Stark's earnings (62,600) Net income $ (363,400) $ (96,800) $ Retained earnings 1/1. $ (376,500) $ (314,300) Net income (above) (363,400) (96,800) Dividends declared 99,300 35,000 Retained earnings 12/31 $ (640,600) $ (376,100) $ Cash and receivables $ 132,000 $ 184,000 Inventory 402,000 131,000 Investment in Stark 771,000 Trademarks 69,000 Land, buildings, and equipment (net) 825,400 333,000 Patented technology 148,600 Total assets $ 2,130,400 $ 865,600 $ Liabilities $ (764,600) $ (277,650) Common stock (400,000) (170,000) Additional paid-in capital (325,200) (41,850) Retained earnings (above) (640,600) (376,100) Total liabilities & stockholders' equity $ (865,600) (2,130,400) < Required A Required B