On January 1, 2017, Panther, Inc., issued securities with a total fair value of $564,000 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 $304,000, the fair value of its trademarks was assessed to be $48,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $212,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2017, Stark sold Panther inventory costing $67,500 for $135,000. As of December 31, 2017, Panther had resold 61 percent of this inventory. In 2018, Panther bought from Stark $143,000 of inventory that had an original cost of $71,500. At the end of 2018, Panther held $38,800 (transfer price) of inventory acquired from Stark, all from its 2018 purchases. During 2018, Panther sold Stark a parcel of land for $89,900 and recorded a gain of $16,300 on the sale. Stark still owes Panther $63,200 (current liability) related to the land sale. At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation Stark Panther, Inc Corporation $(364,000) 191,100 $ (723,800) Revenues 311,000 Cost of goods sold Other operating expenses 81,900 170,300 (16,300) (55,125) Gain on sale of land Equity in Stark's earnings 0 (313,925) (91,000) Net income Retained earnings 1/1/18 Net income (368,000) (313,925) 85,700 (295,300) (91,000) 27,000 Dividends declared (359,300) (596,225) Retained earnings 12/31/18 Cash and receivables 107,000 159,000 326,200 689,300 0 113,500 Inventory Investment in Stark 0 Trademarks 59,800 Land, buildings, and equip. (net) Patented technology 669,300 288,700 0 128,900 1,791,800 749,900 Total assets Prev 5 of 5 Next a. Show how Panther computed its $55,125 equity in Stark's earnings balance. b. Prepare a 2018 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 $55,125 equity in Stark's earnings balance. Equity in Stark's earnings RequiredA > Required B PANTHER AND STARK Consolidation Worksheet Year Ending December 31, 2018 Consolidation Entries Consolidated Accounts Panther Stark Debit Credit Totals $ (723,800) $ (364,000) Revenues Cost of goods sold 311,000 191,100 Other operating expenses 170,300 81,900 Gain on sale of land (16,300) 0 Equity in Stark's earnings (55,125) (313,925) $ (91,000) Net income Retained earnings 1/1 $ (368,000) (295,300) Net income (above) (313,925) (91,000) Dividends declared 85,700 27,000 $(596,225) (359,300) Retained earnings 12/31 $ $ Cash and receivables 107,000 159,000 326,200 Inventory 113,500 689,300 Investment in Stark 0 Trademarks 59,800 Land, buildings, and equipment (net) 669,300 288,700 Patented technology 0 128,900 $ 1,791,800 $ Total assets 749,900 $ (231,900) $ (492,475) Liabilities Common stock (400,000) (110,000) Additional paid-in capital (303,100) (48,700) Retained earnings (above) (596,225) (359,300) (1,791,800) $ (749,900) Total liabilities & stockholders' equity