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 (transfer price) of inventory acquired from Stark, all from its 2024 purchases. During 2024, Panther sold Stark a parcel of land for $89,200 and recorded a gain of $16,200 on the sale. Stark still owes Panther $62,800 (current liability) related to the land sale.
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 (transfer price) of inventory acquired from Stark, all from its 2024 purchases. During 2024, Panther sold Stark a parcel of land for $89,200 and recorded a gain of $16,200 on the sale. Stark still owes Panther $62,800 (current liability) related to the land sale.
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning