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On January 1, 2017, Panther, Inc., issued securities with a total fair value of $605,000 for 100 percent of Stark Corporation's outstanding ownership shares. Stark

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On January 1, 2017, Panther, Inc., issued securities with a total fair value of $605,000 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 $337,000, the fair value of its trademarks was assessed to be $70,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $198.000. 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 $105,000 for $210,000. As of December 31, 2017, Panther had resold 71 percent of this inventory. In 2018, Panther bought from Stark $175,000 of inventory that had an original cost of $87,500. At the end of 2018, Panther held $47,200 (transfer price) of inventory acquired from Stark, all from its 2018 purchases. During 2018, Panther sold Stark a parcel of land for $109,900 and recorded a gain of $19,500 on the sale. Stark still owes Panther $76,000 (current liability) related to the land sale. At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation Revendes Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1/18 Net Income Dividends declared Retained earnings 12/31/18 Cash and receivables Inventory Panther, Inc. $(870,500) 374,500 205,000 (19,500) 161,500 (372.000) (370,000) (372,000) 101.600 (648,400) 130,000 420,200 Stark Corporation $ (395,000) 207,300 88, 800 0 0 $ (98,900) $T(321,2003 (98,900) 32,000 $(38), 100) $ 190,000 15 p/0,00 (Current liabilly) reidleu lo le du Saie. At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation. ully Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1/18 Net income Dividends declared Retained earnings 12/31/18 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 12/31/18 Total liabilities and equity Panther, Inc. $ (870,500) 374,500 205,000 (19,500) (61,500) (372,000) $ (378,000) (372,000) 101,600 $ (648,400) $ 138,000 420,200 770, 700 Stark Corporation $ (395,000) 207,300 88,800 0 0 $ (98,900) $ (321,200) (98,900) 37,000 $(383,100) $ 190,000 135, 200 0 71,200 343, 600 153, 300 $ 893, 300 $ (298,000) (185,000) (27, 200) (383,100) $ (893,300) 862,900 0 $ 2,191,800 $ (812,900) (400,000) (330, 500) (648,400) $ (2,191,800) a. Show how Panther computed its $61,500 equity in Stark's earnings balance. b. Prepare a 2018 consolidated worksheet for Panther and Stark. 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 $61,500 equity in Stark's earnings balance. in Equity in Stark's earnings Required A Required B mework PANTHER AND STARK Consolidation Worksheet Year Ending December 31, 2018 Consolidation Entries Accounts Panther Stark Debit Consolidated Totals Credit $ 0 Revenues Cost of goods sold Other operating expenses Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Cash and receivables Inventory Investment in Stark Trademarks Land, buildings, and equipment (net) Patented technology Total assets $ (870,500) $ (395,000) 374,500 207,300 205,000 88,800 (19,500) 0 (61,500) 0 $ (372,000) $ (98,900) $ (378,000) $ (321,200) (372,000) (98,900) 101,600 37,000 $ (648,400) $ (383,100) $ 138,000 $ 190,000 420,200 135,200 770,700 0 0 71,200 862,900 343,600 0 153,300 $ 2,191,800 $ 893,300 $ 0 0 0 0 Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 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 (above) Total liabilities & stockholders' equity es (19,500) 0 (61,500) 0 $ (372,000) $ (98,900) $ (378,000) $ (321,200) (372,000) (98,900) 101,600 37,000 $ (648,400) $ (383,100) $ 138,000 $ 190,000 420,200 135,200 770,700 0 0 71,200 862,900 343,600 0 153,300 $ 2,191,800 $ 893,300 $ (812,900) $ (298,000) (400,000) (185,000) (330,500) (27 200) (648,400) (383,100) $(2,191,800) $ (893,300) 0 0 0 $ 0 0 Gain on sale of land Equity in Stark's earnings Net income Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 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 (above) Total liabilities & stockholders' equity es (19,500) 0 (61,500) 0 $ (372,000) $ (98,900) $ (378,000) $ (321,200) (372,000) (98,900) 101,600 37,000 $ (648,400) $ (383,100) $ 138,000 $ 190,000 420,200 135,200 770,700 0 0 71,200 862,900 343,600 0 153,300 $ 2,191,800 $ 893,300 $ (812,900) $ (298,000) (400,000) (185,000) (330,500) (27 200) (648,400) (383,100) $(2,191,800) $ (893,300) 0 0 0 $

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