On January 1,2009, Parkway, Inc., issued securities with a total fair value of$450,000 for 100 percent of Skyline Corporation’s outstanding ownership shares. Skyline has long supplied inventory to Parkway, which hopes to achieve synergies with production scheduling and product development with this combination. LO8 Although Skyline’s book value at the acquisition date was $300,000, the fair value of its trademarks was assessed to be $30,000 more than their carrying values. Additionally, Skyline’s patented technology was undervalued in its accounting records by $120,000. The trademarks were considered to have indefinite lives, the estimated remaining life of the patented technology was eight years.

In 2009, Skyline sold Parkway inventory costing $30,000 for $50,000. As of December 31, 2009, Paikway had resold only 28 percent of this inventory. In 2010, Parkway bought from Skyline $80,000 of inventory that had an original cost of $40,000. At the end of2010, Parkway held $28,000 of inventory acquired from Skyline, all from its 2010 purchases.
During 2010, Parkway sold Skyline a parcel of land for $95,000 and recorded a gain of $18,000 on the sale. Skyline still owes Parkway $65,000 related to the land sale.
At the end of 2010, Parkway and Skyline prepared the following statements in preparation for consolidation.
Parkway, Skyline inc. Corporation Revenues.
. . $
(627,000)
$(358,000)
Cost of goods sold.
289,000 195,000 Other operating expenses ....
170,000 75,000 Gain on sale of land.
(18,000)
-0-
Equity in Skyline's earnings.
(55,400)
-0-
Net income.
. . $
(241,400)
$ (88,000)
Retained earnings 1/1/10 .
. ■ $
(314,600)
$(292,000)
Net income.
(241,400)
(88,000)
Dividends distributed ..
70,000 20,000 Retained earnings 12/31/10 . • $
(486,000)
$(360,000)
Cash and receivables.
. . $
134,000 $ 150,000 Inventory ...
281,000 112,000 Investment in Skyline ..
598,000 -0-
Trademarks.
0 •
50,000 Land, buildings, and equip, (net) .........
637,000 283,000 Patented technology ...
-0-
130,000 Total assets..
■ $ '
1,650,000 $ 725,000 1 labilities..
• $
(463,000)
$(215,000)
Common stock...
(410,000)
(120,000)
Additional paid-in capital..
(291,000)
(30,000)
Retained earnings 12/31/10.
(486,000)
(360,000)
Total liabilities and equity.
. $C 1,650,000)
$(725,000)

a. Show how Parkway computed its $55,400 equity in Skyline’s ; earnings balance.

b. Prepare a 2010 consolidated worksheet for Parkway and Sky-line.