5-37 (Algo) (LO 5-2,5-3,5-4, 5-6) On January 1, 2020, Panther, Inc., issued securities with a total fair value of $572,000 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 $306,000, the fair value of its trademarks was assessed to be $50,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $216,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2020, Stark sold Panther inventory costing $70,000 for $140,000. As of December 31, 2020, Panther had resold 60 percent of this inventory. In 2021, Panther bought from Stark $145,000 of inventory that had an original cost of $72,500. At the end of 2021, Panther held $39,300 (transfer price) of inventory acquired from Stark, all from its 2021 purchases. During 2021, Panther sold Stark a parcel of land for $91,100 and recorded a gain of $16,500 on the sale. Stark still owes Panther $64,000 (current liability) related to the land sale. At the end of 2021, Panther and Stark prepared the following statements for consolidation. Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Panther, Inc. $ (733,000) 315,000 Stark Corporation $ (365,000) 191,600 172,500 82,100 (16,500) (56,150) 0 (318,150) (91,300) Retained earnings, 1/1/21 $ (368,500) $ (296,300) Net income (318,150) Dividends declared 86,900 (91,300) 27,500 Retained earnings, 12/31/21 $ (599,750) $ (360,100) Cash and receivables $ 109,000 $ 161,000 Inventory 332,300 114,900 Investment in Stark 696,600 0 Trademarks 60,500 Land, buildings, and equip. (net) 681,900 292,100 Patented technology 0 130,400 Total assets $ 1,819,800 $ 758,900 Liabilities $ (514,650) $ (238,150) Common stock (400,000) Additional paid-in capital (305,400) Retained earnings, 12/31/21 (599,750) Total liabilities and equity $ (1,819,800) (115,000) (45,650) (360,100) $ (758,900) a. Show how Panther computed its $56,150 equity in Stark's earnings balance. b. Prepare a 2021 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 $56,150 equity in Stark's earnings balance. (Input all amounts as positive values.)