On January 1, 2020, Panther, Inc., issued securities with a total fair value of $597,000 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 $341,000, the fair value of its trademarks was assessed to be $74,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $182,000. 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 $110,000 for $220,000. As of December 31, 2020, Panther had resold 77 percent of this inventory. In 2021, Panther bought from Stark $179,000 of inventory that had an original cost of $89,500. At the end of 2021, Panther held $48,300 (transfer price) of inventory acquired from Stark, all from its 2021 purchases.

During 2021, Panther sold Stark a parcel of land for $112,500 and recorded a gain of $19,900 on the sale. Stark still owes Panther $77,600 (current liability) related to the land sale.

At the end of 2021, Panther and Stark prepared the following statements for consolidation.

1. Show how Panther computed its $58,000 equity in Stark's earnings balance.

2. Prepare a 2021 consolidated worksheet for Panther and Stark.

PART 1;

2.

Part 2

PANTHER AND STARK
Consolidation Worksheet
For the Year Ending December 31, 2021
			Consolidation Entries
Accounts	Panther	Stark	Debit	Credit	Consolidated Totals
Revenues	$(888,800)	$(397,000)
Cost of goods sold	382,400	208,300
Other operating expenses	209,300	89,200
Gain on sale of land	(19,900)	0
Equity in Stark's earnings	(58,000)	0
Net income	$(375,000)	$(99,500)
Retained earnings 1/1/21	$(379,500)	$(323,200)
Net income	(375,000)	(99,500)
Dividends declared	102,500	38,000
Retained earnings 12/31/21	$(652,000)	$(384,700)
Cash and receivables	$143,000	$195,000
Inventory	435,400	138,700
Investment in Stark	767,900	0
Trademarks	0	73,000
Land, buildings, and equipment (net)	894,200	352,300
Patented technology	0	157,200
Total assets	$2,240,500	$916,200
Liabilities	$(854,200)	$(314,750)
Common stock	(400,000)	(195,000)
Additional paid-in capital	(334,300)	(21,750)
Retained earnings 12/31/21	(652,000)	(384,700)
Total liabilities and equity	$(2,240,500)	$(916,200)