Question: Problem 4 - 4 ( LO 2 ) 7 0 % , equity, beginning and ending inventory, parent and subsidiary seller. Refer to the preceding

Problem

4 - 4 (

2) 70 %,

equity, beginning and ending inventory, parent and subsidiary seller.

Refer to the preceding facts for Packard

s acquisition of Stude common stock. On January

1, 2016,

Packard held merchandise acquired from Stude for $

10, 000 .

This beginning inventory had an applicable gross profit of

25 % .

During

2016,

Stude sold $

40, 000

worth of merchandise to Packard. Packard held $

6, 000

of this merchandise at December

31, 2016 .

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, 2016,

Stude held merchandise acquired from Packard for $

20, 000 .

This beginning inventory had an applicable gross profit of

40 % .

During

2016,

Packard sold $

60, 000

worth of merchandise to Stude. Stude held $

30, 000

of this merchandise at December

31, 2016 .

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, 2016 .

Prepare supporting amortization and income distribution schedules.

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