On January 1, 2017, Panther, Inc., issued securities with a total fair value of $557,000 for 100 percent of Stark Corporations 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 Starks book value at this acquisition date was $315,000, the fair value of its trademarks was assessed to be $55,000 more than their carrying amounts. Additionally, Starks patented technology was undervalued in its accounting record by S187,000. 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 $80,000 for $160,000. As of December 31, 2017, Panther had resold 62 percent of this inventory. In 2018, Panther bought from Stark $156,000 of inventory that had an original cost of $78,000. At the end of 2018, Panther held $42,200 (transfer price) of inventory acquired from Stark, all from its 2018 purchases.

During 2018, Panther sold Stark a parcel of land for $98,000 and recorded a gain of $17,600 on the sale. Stark still owes Panther $68,400 (current liability) related to the land sale.

At the end of 2018, Panther and Stark prepared the following statements in preparations for consolidation.

	Panther, Inc.	Stark Corporation
Revenues	$ (783,300)	$ (371,000)
Cost of goods sold	336,700	194,700
Other operating expenses	184,300	83,400
Gains on sale of land	(17,600)	0
Equity in Starks earnings	(61,225)	0
Net income	$ (341,125)	$ (92,900)
Retained earnings 1/1/18	$ (371,500)	$ (301,600)
Net income	(341,125)	(92,900)
Dividends declared	93,200	30,000
Retained earnings 12/31/18	$ (619,425)	$ (364,500)
Cash and receivables	$ 118,000	$ 170,000
Inventory	359,600	121,200
Investment in Stark	702,400	0
Trademarks	0	63,800
Land, buildings, and equip. (net)	738,100	308,000
Patented technology	0	137,500
Total assets	$ 1,918,100	$ 800,500
Liabilities	$ (587,175)	$ (254,650)
Common stock	(400,000)	(135,000)
Additional paid-in capital	(311,500)	(46,350)
Retained earnings 12/31/18	(619,425)	(364,500)
Total liabilities and equity	$ (1,918,100)	$ (800,500)

a. Show how Panther computed its $61,225 equity in Starks earnings balance.

b. Prepare a 2018 consolidated worksheet for Panther and Stark.