refer to the preceding facts for pontiac s acquisition of 80 of stark s common stock 4373533

Refer to the preceding facts for Pontiac’s acquisition of 80% of Stark’s common stock and the bond transactions. Pontiac uses the simple equity method to account for its investment in Stark. On January 1, 2016, Stark held merchandise acquired from Pontiac for $20,000. During 2016, Pontiac sold $60,000 worth of merchandise to Stark. Stark held $25,000 of this merchandise at December 31, 2016. Stark owed Pontiac $12,000 on December 31 as a result of these intercompany sales. Pontiac has a gross profit rate of 30%. Pontiac and Stark had the following trial balances on December 31, 2016: Required Prepare the worksheet necessary to produce the consolidated financial statements for Pontiac Company and its subsidiary Stark Company for the year ended December 31, 2016. Include the determination and distribution of excess and income distribution schedules. On January 1, 2014, Pontiac Company acquired an 80% interest in the common stock of Stark Company for $400,000. Stark had the following balance sheet on the date of acquisition: Buildings (20-year life) are undervalued by $80,000. Equipment (5-year life) is undervalued by $50,000. Any remaining excess is considered to be goodwill. Stark issued $100,000 of 8%, 10-year bonds for $96,719 on January 1, 2011. Annual interest is paid on December 31. Pontiac purchased the bonds on January 1, 2015, for $104,770. Both companies use the straight-line method to amortize the premium/discount on the bonds. Pontiac and Stark used the following bond amortization schedules:
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Refer to the preceding facts for Pontiac s acquisition of 80

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