P6.4 Consolidated Financial Statements with Various Intercompany Transactions Several years ago Purna Athletics acquired all of the outstanding stock of Serengeti Footwear. The acquisition cost was $40 million in excess of Serengeti's book valne of S10 mil, ttrihuted to indefinite-lived brand names with a fair value of $8 million, and goodwill. The brand names are unimpaired, but the good- will was impaired by $2 million as of the beginning of the current year. There is no goodwill impairment in the current year. The following information relates to intercompany transactions: Puma's beginning inventory includes S500,000 of intercompany protit on goods purchased from Serengeti. Puma made no intercompany purchases during the current year and has no ending inven- tory of goods purchased from Serengeti. Serengeti's ending inventory includes $300000 of intercom- pany profit on purchases of $4,000,000 from Puma. * Serengeti's other expenses include a loss ot $20),000 on an intercompany sale of land to Puma Puma's other income reflects a $700 000 gain on the sale of machinery to Serengeti at the beginning of the year. At the date of sale, the machinery had a remaining life of five years; it is being straight-line depreciated * Several years ago, Puma recorded a gain of $250,000 on land sold to Serengeti for $600,000. Serengeti sold the land to an outside party during the year for $800,000. The gain is reflected in Serengeti's other ncome account The end-of-year trial balances of Puma and Serengeti are below. Puma uses the complete equity methood to account for its investment in Serengeti on its own books Serengeti Dr (Cr) Puma in thousands) Dr (Cr) S 10,000 150,000 200,000 600,000 64,540 (750,250) (2,000) (267,000) 1,000 (350,000) (5,000) (1,290 275,000 70,000 5,000 $ 4,000 85,000 120,000 380,000 Plant and equipment, net Investment in Serengeti (561,800) (1,500) (24,500) Capital stock Dividends (73,000) (2,000) Cost of sales 47,000 24,000 2,800 Total Required Prepare a schedule to calculate Puma's equity in net income of Serengeti, reported on its own books at $1,290,000 Prepare a schedule to calculate Puma's investment in Serengeti, reported on its own booksat $64,540.000 Prepare a working paper to consolidate the trial balances of Puma and Serengeti at the end of the current year a. b. c