**How Panther Computed Its $64,125 Equity in Stark's Earnings Balance**This table outlines the components used by Panther to determine its $64,125 equity in Stark's earnings balance. All amounts should be input as positive values.| Description | Amount ||-----------------------------------------|--------------|| Stark reported net income | ✔️ || Beginning inventory gross profit | ✔️ || Patented technology amortization | ✔️ || Ending inventory gross profit | ✔️ || **Equity in Stark’s earnings** | | Please ensure all calculations adhere to these guidelines to accurately reflect equity. **Acquisition and Consolidation Details****Background:**On January 1, 2020, Panther, Inc., acquired all outstanding shares of Stark Corporation for $582,000. Stark's book value was $342,000, but its trademarks and patented technology were assessed to be worth more than their recorded values. The patents had a remaining life of eight years.**Inventory Transactions:**- In 2020, Stark sold inventory costing $112,500 to Panther for $225,000.- By December 31, 2020, Panther had sold 74% of this inventory.- In 2021, Panther bought $180,000 worth of inventory (original cost $90,000) from Stark.- At the end of 2021, Panther had $48,600 of inventory from its 2021 purchases.**Land Sale:**- In 2021, Stark sold land to Panther for $113,200, recording a $20,000 gain.- Stark has a $78,000 liability related to the land sale.**Consolidated Financial Statements:**- **Revenues**: Panther, Inc. ($893,400), Stark ($398,000)- **Net Income**: Panther, Inc. ($382,725), Stark ($99,800)- **Retained Earnings (12/31/21)**: Panther, Inc. ($658,125), Stark ($385,500)- **Assets**: Panther, Inc. total ($2,269,300), Stark total ($930,100)- **Liabilities**: Panther, Inc. total ($875,375), Stark total ($318,650) **Key Assets and Liabilities:**- **Cash and Receivables**: Panther ($146,000), Stark ($198,000)- **Inventory**: Panther ($444,500), Stark ($140,800)- **Investment in Stark**: $765,900- **Trademarks**: Stark ($74,100)- **Patented Technology**: Stark ($159,600) **Equity and Retained Earnings Adjustments:**- Introduce how Panther computed its $64,125 equity in Stark's earnings: - Recognize intercompany profits and adjustments for accurate consolidation.This consolidation aims to merge financial reports effectively, reflecting accurate valuation increases and inventory profits between Panther, Inc. and Stark Corporation.

Consolidated accounting refers to the process of combining the financial statement of a parent…

Show how Panther computed its $64,125 equity in Stark's earnings bala Stark reported net income Beginning inventory gross profit Patented technology amortization Ending inventory gross profit Equity in Stark's earnings

Show how Panther computed its $64,125 equity in Stark's earnings bala Stark reported net income Beginning inventory gross profit Patented technology amortization Ending inventory gross profit Equity in Stark's earnings

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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