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$80,800 (current liability) related to the land sale.At the end of 2024, Panther and Stark prepared the following statements for consolidation.ItemsRevenuesCost of goods soldOther operating expensesGain on sale of landEquity in Stark's earningsNet incomeRetained earnings, 1/1/24Net incomeDividends declaredRetained earnings, 12/31/24Cash and receivablesInventoryInvestment in StarkTrademarksLand, buildings, and equipment (net)Patented technologyTotal assetsLiabilitiesAdditional paid-in capitalCommon stockRetained earnings, 12/31/24Total liabilities and equityRequired:Panther,Incorporated$ (925,400)398,200217,900(20,700)(59,950)$ (389,950)$ (382,500)(389,950)106,600$ (665,850)$ 153,000465,700StarkCorporation$ (406,000)213,00091,200Ө0$ (101,800)$ (330,700)(101,800)40,500$ (392,000)$ 205,000145,700820,4000076,600956,500369,7000165,000$ 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 $59,950 equity in Stark's earnings balance.b. Prepare a 2024 consolidated worksheet for Panther and Stark.Complete this question by entering your answers in the tabs below.Required A Required BPrepare a 2024 consolidated worksheet for Panther and Stark.Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter thisamount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in thecredit column of the worksheet. Input all amounts as positive values.AccountsPANTHER AND STARKConsolidation WorksheetFor the Year Ending December 31, 2024PantherStarkConsolidation EntriesDebitCreditConsolidatedTotalsRevenuesCost of goods soldOther operating expensesGain on sale of landEquity in Stark's earningsNet incomeRetained earnings, 1/1Net incomeDividends declaredRetained earnings, 12/31Cash and receivablesInventoryInvestment in StarkTrademarksLand, buildings, and equipment (net)Patented technologyTotal assetsLiabilitiesCommon stockAdditional paid-in capital$ (925,400) $ (406,000)398,200217,900(20,700)(59,950)213,00091,20000$ (389,950) $ (101,800)$ (382,500) $ (330,700)(389,950) (101,800)106,60040,500$ (665,850) $ (392,000)$ 153,000 $ 205,000465,700820,400145,7000076,600956,500369,7000165,000$ 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▲

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.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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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…
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