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

Exercise 9

70%, equity, beginning and ending inventory, parent and 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 this intercompany sale. On January 1, 2012, Stude held merchandise acquired from Packard for $20,000. This beginning inventory had an applicable gross profit of 40%. During 2012, Packard sold $60,000 worth of merchandise to Stude. Stude held $30,000 of this merchandise at December 31, 2012. This ending inventory had an applicable gross profit of 35%. Stude owed Packard $23,000 on December 31 as a result of this intercompany sale.
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.