On January 1, 2020, Panther, Inc., issued securities with a total fair value of $582,000 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 $342,000, the fair value of its trademarks was assessed to be $75,000 morethan their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $165,000. Thetrademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.In 2020, Stark sold Panther inventory costing $112,500 for $225,000. As of December 31, 2020, Panther had resold 74 percent of thisinventory. In 2021, Panther bought from Stark $180,000 of inventory that had an original cost of $90,000. At the end of 2021, Pantherheld $48,600 (transfer price) of inventory acquired from Stark, all from its 2021 purchases.During 2021, Panther sold Stark a parcel of land for $113,200 and recorded a gain of $20,000 on the sale. Stark still owes Panther$78,000 (current liability) related to the land sale.At the end of 2021, Panther and Stark prepared the following statements for consolidation.RevenuesCost of goods soldOther operating expensesGain on sale of landEquity in Stark's earningsNet incomeRetained earnings, 1/1/21Net incomeDividends declaredRetained earnings, 12/31/21Cash and receivablesInventoryInvestment in StarkTrademarksLand, buildings, and equip. (net)Patented technologyTotal assetsLiabilitiesCommon stockAdditional paid-in capitalRetained earnings, 12/31/21Total liabilities and equityPanther, Inc.$ (893,400)384,400210,400(20,000)(64, 125)(382,725)$$$$(380,000)(382,725)104,600(658, 125)146,000444,500765,9000912,9000$ 2,269,300$(875,375)(400,000)(335,800)(658,125)$ (2,269,300)StarkCorporation$ (398,000)208, 80089,40000$ (99,800)$ (324, 200)(99, 800)38,500$ (385,500)$ 198,000140, 800074,100357,600159, 600$ 930, 100$ (318,650)(200,000)(25,950)(385,500)$ (930, 100)a. Show how Panther computed its $64,125 equity in Stark's earnings balance.b. Prepare a 2021 consolidated worksheet for Panther and Stark.

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Description: On January 1, 2020, Panther, Inc., issued securities with a total fair value of $582,000 for 100 percent of Stark Corporation'soutstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies with

S's reported income$( 99,800)Patented technology amortization $20,625Starting inventory gross…

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a. Show how Panther computed its $64,125 equity in Stark's earnings balance. b. Prepare a 2021 consolidated worksheet for Panther and Stark.

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

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

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

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On January 1, 2020, Panther, Inc., issued securities with a total fair value of $582,000 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 $342,000, the fair value of its trademarks was assessed to be $75,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $165,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2020, Stark sold Panther inventory costing $112,500 for $225,000. As of December 31, 2020, Panther had resold 74 percent of this inventory. In 2021, Panther bought from Stark $180,000 of inventory that had an original cost of $90,000. At the end of 2021, Panther held $48,600 (transfer…
On January 1, 2020, Panther, Inc., issued securities with a total fair value of $582,000 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 $342,000, the fair value of its trademarks was assessed to be $75,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $165,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years. In 2020, Stark sold Panther inventory costing $112,500 for $225,000. As of December 31, 2020, Panther had resold 74 percent of this inventory. In 2021, Panther bought from Stark $180,000 of inventory that had an original cost of $90,000. At the end of 2021, Panther held $48,600…
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