Pavin acquires all of Stabler's outstanding shares on January 1, 2015, for $500,000 in cash, Of this amount, $34,000 was attributed to equipment with a 10-year remaining life and $44,000 was assigned to trademarks expensed over a 20-year period. Pavin applies the partial equity method so that income is accrued each period based solely on the earnings reported by the subsidiary.

Help Save & Exlt On January 1. 2018, Pavin reports $340,000 in bonds outstanding with a carrying amount of $320,400. Stabler purchases half of these bonds on the open market for $165,100.

In 2018, Pavin begins to sell merchandıse to Stabler. During that year, inventory costing $96.000 was transferred at a price of $120.000 All but $14 000 (at sales price) of these goods were resold to outside parties by year-end Stabler stll owes $37.000 for inventory shipped from Pavin during December.

The following financial figures are for the two companies for the year ending December 31, 2018 Dividends were both declared and paid during the current year.

 

Pavin (752,000) 459,000 129,000 40,000 Stabler Revenues $(513,000) 244, 000 162,500 Cost of goods sold Expenses Interest expense-bonds Interest income-bond investment Loss on extinguishment of bonds Equity in Stabler's income (19,100) (125,600) $ (249,600) $ 349,000) (249,600) 159, 000 $ (439, 600) 221,000 179,000 615,600 Net income $(125,600) Retained earnings, 1/1/18 Net income $(369, 000) (125,600) 81,000 $(413,680) Dividends paid Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stabler $ 39,000 91,000 166,000 545,000 Investment in Pavin bonds Land, buildings, and equipment (net) Trademarks 249,000 $ 1,264, 600 $ (188,000) (340,000) 16,000 (313,000) $ 841,060 $(199,400) (104,000) Total assets Accounts payable Bonds payable Discount on bonds Common stock (124, 000)