On January 1, 2023, Panther, Incorporated, issued securities with a total fair value of $616,000 for 100 percent of Stark Corporation'soutstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies withproduction 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 morethan their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $188,000. Thetrademarks 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 thisinventory. In 2024, Panther bought from Stark $187,000 of inventory that had an original cost of $93,500. At the end of 2024, Pantherheld $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$80,800 (current liability) related to the land sale.At the end of 2024, Panther and Stark prepared the following statements for consolidation.StarkCorporation$ (406,000)213,00091,200ItemsRevenuesCost of goods soldOther operating expensesGain on sale of landEquity in Stark's earningsNet incomeRetained earnings, 1/1/24Net incomeDividends declaredRetained earnings, 12/31/24Cash and receivables.InventoryInvestment in StarkTrademarksLand, buildings, and equipment (net)Patented technologyTotal assetsLiabilitiesCommon stockAdditional paid-in capitalRetained earnings, 12/31/24Total liabilities and equityRequired A Required BAccountsRevenuesCost of goods soldOther operating expensesGain on sale of landEquity in Stark's earningsNet incomeRetained earnings, 1/1Net incomeDividends declaredRetained earnings, 12/31Cash and receivablesPanther,Incorporated$ (925,400)398, 200217,900(20,700)(59,950)InventoryInvestment in StarkTrademarks$ (389,950)$ (382,500)(389,950)106,600$ (665,850)Land, buildings, and equipment (net)Patented technologyTotal assets$ 153,000465,700820,4000Required:a. Show how Panther computed its $59,950 equity in Stark's earnings balance.b. Prepare a 2024 consolidated worksheet for Panther and Stark.LiabilitiesCommon stockAdditional paid-in capitalRetained earnings, 12/31Total liabilities and equity956,5000Complete this question by entering your answers in the tabs below.$ 2,395,600$ (990,850)(400,000)(338,900)(665,850)$ (2,395,600)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 thisamount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in thecredit column of the worksheet. Input all amounts as positive values.PANTHER AND STARKConsolidation WorksheetFor the Year Ending December 31, 2024PantherStark$ (925,400) $ (406,000)398,200213,00091,200217,900(20,700)(59,950)$ (389,950) $ (101,800)$(382,500) $ (330,700)(101,800)(389,950)106,60040,500$ (665,850) $ (392,000)$153,000 $ 205,000145,700465,700820,4000$ (101,800)$ (330,700)(101,800)40,50000$ (392,000)$ 205,000145,700076,600369,700956,5000165,000$ 2,395,600 $ 962,000$ (990,850) $ (314,650)(400,000)(215,000)(338,900)(40,350)(665,850)(392,000)$ (2,395,600) $ (962,000) $076,600369,700165,000$ 962,000$ (314,650)(215,000)00(40,350)(392,000)$ (962,000)Consolidation EntriesCreditDebit0 $0ConsolidatedTotalsShow less

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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