P6.4 Help Please

Consolidated Financial Statements with Various Intercompany Transactions Several years ago Puma Athletics acquired all of the outstanding stock of Serengeti Footwear. The acquisition cost was $40 million in excess of Serengeti's book value of $10 million, attributed 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 e Puma's beginning inventory includes $500,000 of intercompany profit 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 $300,000 of intercom- pany profit on purchases of $4,000,000 from Puma. e Serengeti's other expenses include a loss of $200,000 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 of the year. At the date of sale, the machinery had a remaining life of five years; it is being str depreciated e 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 gain on the sale of machinery to Serengeti at the beginning income account. The end-of-year trial balances of Puma and Serengeti are below. Puma uses the c to account for its investment in Serengeti on its own books. Puma Serengeti Dr (Cr) (in thousands) Dr (Cr) Cash and receivables. .. $10,000 150,000 200,000 600,000 64,540 (750,250) (2,000) (267,000) 1,000 $ 4,000 Inventories... 85,000 Land 120,000 380,000 Investment in Serengeti (561,800) (1,500) (24,500) Retained earnings, beginning Dividends Sales revenue.. (350,000) (5,000) (1,290) 275,000 70,000 (73,000) (2,000) Other income . . Equity in net income. 47,000 Operating expenses 24,000 Other expenses. 5,000 2,800 Total 0 Required Prepare a schedule to calculate Puma's equity in net income of Serengeti, reported on its own books at $1,290,000 b. a. Prepare a schedule to calculate Puma's investment in Serengeti, reported on its own books at $64,540,000 Prepare a working paper to consolidate the trial balances of Puma and Serengeti at the end of the current year. Label your eliminating entries (C), (I), (E), and (R) c