Consolidation Problem

On January 1, 2020, Panther, Inc., issued securities with a total fair value of $585,000 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 $327,000, the fair value of its trademarks was assessed to be $63,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $195,000. 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 $92,500 for $185,000. As of December 31, 2020. Panther had resold 79 percent of this inventory. In 2021, Panther bought from Stark $166,000 of inventory that had an original cost of $83.000. At the end of 2021. Panther held $44,800 (transfer price) of inventory acquired from Stark, all from its 2021 purchases. During 2021, Panther sold Stark a parcel of land for $104.200 and recorded a gain of $18,600 on the sale. Stark still owes Panther $72.400 (current liability) related to the land sale. At the end of 2021. Panther and Stark prepared the following statements for consolidation At the end of 2021, Panther and Stark prepared the following statements for consolidation. Stark Corporation $ (381,000) 199,900 85,600 Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Stark Trademarks Land, buildings, and equip. (net) Patented technology Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity Panther, Inc. $ (829,200) 356,600 195,200 (18,600) (49,550) $ (345,550) $ (375,000) (345,550) 94,400 $ (626,150) $ 126,000 383,800 723,000 $ (95,500) $ (310, 100) (95,500) 33,500 $ (372,100) $ 180,000 128,200 788,000 $ 2,020,800 $ (673,250) (400,000) (321,400) (626,150) $ (2,020,800) 67,500 325,800 145,400 $ 846,900 $ (292,150) (160,000) (22,650) (372,100) $ (846,900) a. Show how Panther computed its $49,550 equity in Stark's earnings balance. b. Prepare a 2021 consolidated worksheet for Panther and Stark. Required A Required B Show how Panther computed its $49,550 equity in Stark's earnings ba Equity in Stark's earnings Recared VOIE PANTHER AND STARK Consolidation Worksheet For the Year Ending December 31, 2021 Consolidation Entries Accounts Panther Stark Debit Credit Consolidated Totals Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Cash and receivables Inventory Investment in Stark Trademarks Land buildings and equipment (net) Patented technology Total assets $ (829,200) $ (381,000) 356,600 199,900 195,200 85,600 (18,600) 0 (49,550) 0 $ (345,550) $ (95,500) $ (375,000) $ (310,100) (345,550) (95,500) 94,400 33,500 $ (626,150) $ (372,100) S 126,000 $ 180,000 383 800 128 200 723 000 0 0 67,500 788,000 325 800 0 145,400 $ 2,020,800 $ 846,900 $ (673 250) $ (292 150) Liabilities Accounts Panther Stark Debit Credit Consolidated Totals Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Cash and receivables Inventory Investment in Stark Trademarks Land buildings, and equipment (net) Patented technology Total assets Liabilities Common stock Additional paid-in capital Retained earnings 12/31/21 Total liabilities and equity $ (829,200) $ (381,000) 356,600 199,900 195,200 85,600 (18,600) 0 (49,550) 0 $ (345,550) $ (95,500) (375,000) $ (310,100) (345,550) (95,500) 94,400 33,500 $ (626,150) $ (372,100) s 126,000 $ 180,000 383,800 128,200 723,000 0 0 67,500 788.000 325,800 0 145,400 $ 2,020,800 $ 846 900 $ (673 250) $ (292,150) (400,000) (160,000) (321,400) (22 650) (626 150) (372.100) $'2 020 800) S (846,900)