Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 3

70%, equity, beginning and ending inventory, subsidiary seller. Refer to the preceding facts for Packard's acquisition of Stude common stock. On January 1, 2012, Packard held merchandise acquired from Stude for $10,000. This beginning inventory had an applicable gross profit of 25%. During 2012, Stude sold $40,000 worth of merchandise to Packard. Packard held $6,000 of this merchandise at December 31, 2012. This ending inventory had an applicable gross profit of 30%. Packard owed Stude $11,000 on December 31 as a result of these intercompany sales.
1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Stude.
2. Complete a consolidated worksheet for Packard Corporation and its subsidiary Stude Corporation as of December 31, 2012. Prepare supporting amortization and income distribution schedules.