On January 1, 2017, Panther, Inc., issued securities with a total fair value of $577,000 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 $300,000, the fair value of its trademarks was assessed to be $45,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $232,000. 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 $75,000 for $125,000. As of December 31, 2017, Panther had resold 74 percent of this inventory. In 2018, Panther bought from Stark $140,000 of inventory that had an original cost of $70,000. At the end of 2018, Panther held $38,000 (transfer price) of inventory acquired from Stark, all from its 2018 purchases.

During 2018, Panther sold Stark a parcel of land for $88,000 and recorded a gain of $16,000 on the sale. Stark still owes Panther $62,000 (current liability) related to the land sale.

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

	Panther, Inc.				Stark Corporation
Revenues	$	(710,000	)		$	(360,000	)
Cost of goods sold		305,000				189,000
Other operating expenses		167,000				81,000
Gain on sale of land		(16,000	)			0
Equity in Stark's earnings		(39,000	)			0
Net income	$	(293,000	)		$	(90,000	)
Retained earnings 1/1/18	$	(367,000	)		$	(292,000	)
Net income		(293,000	)			(90,000	)
Dividends declared		80,000				25,000
Retained earnings 12/31/18	$	(580,000	)		$	(357,000	)
Cash and receivables	$	102,000			$	154,000
Inventory		311,000				110,000
Investment in Stark		691,000				0
Trademarks		0				58,000
Land, buildings, and equip. (net)		638,000				280,000
Patented technology		0				125,000
Total assets	$	1,742,000			$	727,000
Liabilities	$	(462,000	)		$	(220,000	)
Common stock		(400,000	)			(100,000	)
Additional paid-in capital		(300,000	)			(50,000	)
Retained earnings 12/31/18		(580,000	)			(357,000	)
Total liabilities and equity	$	(1,742,000	)		$	(727,000	)

1. Show how Panther computed its $39,000 equity in Stark's earnings balance.

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