On January 1, 2023, Panther, Incorporated, issued securities with a total fair value of $616,000 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 $350,000, the fair value of its trademarks was assessed to be $78,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $188,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2023, Stark sold Panther inventory costing $120,000 for $240,000. As of December 31, 2023, Panther had resold 77 percent of this inventory. In 2024, Panther bought from Stark $187,000 of inventory that had an original cost of $93,500. At the end of 2024, Panther held $50,500 (transfer price) of inventory acquired from Stark, all from its 2024 purchases.
On January 1, 2023, Panther, Incorporated, issued securities with a total fair value of $616,000 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 $350,000, the fair value of its trademarks was assessed to be $78,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $188,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2023, Stark sold Panther inventory costing $120,000 for $240,000. As of December 31, 2023, Panther had resold 77 percent of this inventory. In 2024, Panther bought from Stark $187,000 of inventory that had an original cost of $93,500. At the end of 2024, Panther held $50,500 (transfer price) of inventory acquired from Stark, all from its 2024 purchases.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 1, 2023, Panther, Incorporated, issued securities with a total fair value of $616,000 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 $350,000, the fair value of its trademarks was assessed to be $78,000 more
than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $188,000. The
trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.
In 2023, Stark sold Panther inventory costing $120,000 for $240,000. As of December 31, 2023, Panther had resold 77 percent of this
inventory. In 2024, Panther bought from Stark $187,000 of inventory that had an original cost of $93,500. At the end of 2024, Panther
held $50,500 (transfer price) of inventory acquired from Stark, all from its 2024 purchases.
During 2024, Panther sold Stark a parcel of land for $117,700 and recorded a gain of $20,700 on the sale. Stark still owes Panther
$80,800 (current liability) related to the land sale.
At the end of 2024, Panther and Stark prepared the following statements for consolidation.
Items
Revenues
Cost of goods sold
Other operating expenses
Gain on sale of land
Equity in Stark's earnings
Net income
Retained earnings, 1/1/24
Net income
Dividends declared
Retained earnings, 12/31/24
Cash and receivables
Inventory
Investment in Stark
Trademarks
Land, buildings, and equipment (net)
Patented technology
Total assets
Liabilities
Additional paid-in capital
Common stock
Retained earnings, 12/31/24
Total liabilities and equity
Required:
Panther,
Incorporated
$ (925,400)
398,200
217,900
(20,700)
(59,950)
$ (389,950)
$ (382,500)
(389,950)
106,600
$ (665,850)
$ 153,000
465,700
Stark
Corporation
$ (406,000)
213,000
91,200
Ө
0
$ (101,800)
$ (330,700)
(101,800)
40,500
$ (392,000)
$ 205,000
145,700
820,400
0
0
76,600
956,500
369,700
0
165,000
$ 2,395,600
$ 962,000
$ (990,850)
(400,000)
(338,900)
(665,850)
$ (2,395,600)
$ (314,650)
(215,000)
(40,350)
(392,000)
$ (962,000)
a. Show how Panther computed its $59,950 equity in Stark's earnings balance.
b. Prepare a 2024 consolidated worksheet for Panther and Stark.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare a 2024 consolidated worksheet for Panther and Stark.
Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this
amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the
credit column of the worksheet. Input all amounts as positive values.
Accounts
PANTHER AND STARK
Consolidation Worksheet
For the Year Ending December 31, 2024
Panther
Stark
Consolidation Entries
Debit
Credit
Consolidated
Totals
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
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
$ (925,400) $ (406,000)
398,200
217,900
(20,700)
(59,950)
213,000
91,200
0
0
$ (389,950) $ (101,800)
$ (382,500) $ (330,700)
(389,950) (101,800)
106,600
40,500
$ (665,850) $ (392,000)
$ 153,000 $ 205,000
465,700
820,400
145,700
0
0
76,600
956,500
369,700
0
165,000
$ 2,395,600
$ 962.000
$ (990,850) $ (314,650)
(400,000)
(215,000)
(338,900)
Retained earnings, 12/31
(665,850)
(40,350)
(392,000)
Total liabilities and equity
$ (2,395,600)
$ (962,000) $
0 $
Show less▲](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F679e8cca-6cc5-491c-b9ef-49448ed093a5%2F5189bc67-c0ea-4b44-94a4-16d8991a6af5%2F64zp9xi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2023, Panther, Incorporated, issued securities with a total fair value of $616,000 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 $350,000, the fair value of its trademarks was assessed to be $78,000 more
than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $188,000. The
trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.
In 2023, Stark sold Panther inventory costing $120,000 for $240,000. As of December 31, 2023, Panther had resold 77 percent of this
inventory. In 2024, Panther bought from Stark $187,000 of inventory that had an original cost of $93,500. At the end of 2024, Panther
held $50,500 (transfer price) of inventory acquired from Stark, all from its 2024 purchases.
During 2024, Panther sold Stark a parcel of land for $117,700 and recorded a gain of $20,700 on the sale. Stark still owes Panther
$80,800 (current liability) related to the land sale.
At the end of 2024, Panther and Stark prepared the following statements for consolidation.
Items
Revenues
Cost of goods sold
Other operating expenses
Gain on sale of land
Equity in Stark's earnings
Net income
Retained earnings, 1/1/24
Net income
Dividends declared
Retained earnings, 12/31/24
Cash and receivables
Inventory
Investment in Stark
Trademarks
Land, buildings, and equipment (net)
Patented technology
Total assets
Liabilities
Additional paid-in capital
Common stock
Retained earnings, 12/31/24
Total liabilities and equity
Required:
Panther,
Incorporated
$ (925,400)
398,200
217,900
(20,700)
(59,950)
$ (389,950)
$ (382,500)
(389,950)
106,600
$ (665,850)
$ 153,000
465,700
Stark
Corporation
$ (406,000)
213,000
91,200
Ө
0
$ (101,800)
$ (330,700)
(101,800)
40,500
$ (392,000)
$ 205,000
145,700
820,400
0
0
76,600
956,500
369,700
0
165,000
$ 2,395,600
$ 962,000
$ (990,850)
(400,000)
(338,900)
(665,850)
$ (2,395,600)
$ (314,650)
(215,000)
(40,350)
(392,000)
$ (962,000)
a. Show how Panther computed its $59,950 equity in Stark's earnings balance.
b. Prepare a 2024 consolidated worksheet for Panther and Stark.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare a 2024 consolidated worksheet for Panther and Stark.
Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this
amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the
credit column of the worksheet. Input all amounts as positive values.
Accounts
PANTHER AND STARK
Consolidation Worksheet
For the Year Ending December 31, 2024
Panther
Stark
Consolidation Entries
Debit
Credit
Consolidated
Totals
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
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
$ (925,400) $ (406,000)
398,200
217,900
(20,700)
(59,950)
213,000
91,200
0
0
$ (389,950) $ (101,800)
$ (382,500) $ (330,700)
(389,950) (101,800)
106,600
40,500
$ (665,850) $ (392,000)
$ 153,000 $ 205,000
465,700
820,400
145,700
0
0
76,600
956,500
369,700
0
165,000
$ 2,395,600
$ 962.000
$ (990,850) $ (314,650)
(400,000)
(215,000)
(338,900)
Retained earnings, 12/31
(665,850)
(40,350)
(392,000)
Total liabilities and equity
$ (2,395,600)
$ (962,000) $
0 $
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