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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- 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…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…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, 2023, Panther, Incorporated, issued securities with a total fair value of $579,000 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 $301,000, the fair value of its trademarks was assessed to be $47,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $231,000. 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 $65,000 for $130,000. As of December 31, 2023, Panther had resold 63 percent of this inventory. In 2024, Panther bought from Stark $142,000 of inventory that had an original cost of $71,000. At the end of 2024, Panther held $38,500…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…ABC Inc. purchased 35,000 voting shares out of 123 Inc.'s 50,000 outstanding voting shares for $350,000 on January 1, 2020. On the date of acquisition, 123's common shares and retained earnings were valued at $120,000 and $180,000, respectively. 123's book values approximated its fair values on the acquisition date with the exception of a patent and a trademark, neither of which had been previously recorded. The fair values of the patent and trademark on the date of acquisition were $30,000 and $20,000 respectively. On January 2, 2020, ABC sold 7,000 shares of 123 on the open market for $57,750. ABC Inc. uses the equity method to account for its investment in 123 Inc. What is the carrying value of the trademark after the sale? A. $12,600 B. $18,000 C. $20,000 D. $30,000
- On January 1, 2020, the Balading Corporation purchased marketable equity securities for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. Because the securities were acquired not for immediate trading, Balading exercised its option to take the change in fair value through other comprehensive income. The securities had the following fair values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. No securities were sold during 2020 and 2021. What amount of unrealized gain or loss should be reported in the December 31, 2021 statement of financial position as a component of shareholders' equity? A P250,000 cumulative unrealized loss B) P200,000 cumulative unrealized loss P100,000 cumulative unrealized gain D P50,000 cumulative unrealized gainOn January 1, 2020, the Pacita Corporation purchased equity securities for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. Because the securities were acquired not for immediate trading, Pacita exercised its option to measure the change in fair value through other comprehensive income. The securities had the following market values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. No securities were sold during 2020 and 2021. What amount of unrealized gain or loss should be reported in December 31, 2021 statement of financial position as a component of shareholders’ equity?On January 1, 2020, the Evergreen Corporation purchased marketable equity securities for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. Because the securities were acquired not for immediate trading, Evergreen exercise its option to take the change in fair values through other comprehensive income. The securities had the following fair values at December 31, 2020 and 2021, respectively; P1,750,000 and P2,100,000. No securities were sold during 2020 and 2021. What amount of unrealized gain or loss should be reported in the December 31, 2021 statement of financial position as a component of shareholder’s equity.
- On January 1, 2020, the Pacita Corporation purchased marketable equity securities for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. immediate trading, Pacita exercised its option to take the change in fair value through other comprehensive income. securities had the following fair values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. Because the securities were acquired not for The No securities were sold during 2020 or 2021. What amount of unrealized gain or loss should be reported in the December 31, 2021 statement of financial position as a component of shareholders' equity? P200,000 cumulative unrealized loss P250,000 cumulative unrealized loss P50,000 cumulative unrealized gain P100,000 cumulative unrealized gain а. b. с. d.On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $776,300 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $332,700 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $134,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years. The following financial information is available for these two companies for 2021. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Truman Atlanta Revenues $ (681,680 ) $ (496,000 ) Operating expenses 412,000 334,000 Income of subsidiary (47,320 ) 0 Net income $ (317,000 ) $ (162,000 ) Retained earnings, 1/1/21 $…On January 1, 2020, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,141,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,380,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $240,000. On January 1, 2021, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $415,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2020 2021 Net income $340,000 $440,000 Dividends declared 150,000 180,000 Show Palka’s journal entry to record its January 1, 2021, acquisition of an additional 25…