Worksheet, separate tax, simple equity, inventory, fixed asset sale, analyze price, late...

Worksheet, separate tax, simple equity, inventory, fixed asset sale, analyze price, later year. Refer to the preceding facts for Penske’s acquisition of Stock common stock. Penske accounts for its investment in Stock using the simple equity method, including income tax effects. During 2013, Stock sells $40,000 worth of merchandise to Penske. As a result of these intercompany sales, Penske holds beginning inventory of $16,000

and ending inventory of $10,000 of merchandise acquired from Stock. At December 31, 2013, Penske owes Stock $8,000 from merchandise sales. Stock has a gross profit rate of 30%.

During 2013, Penske sells $60,000 worth of merchandise to Stock. Stock holds $15,000 of this merchandise in its ending inventory. Stock owes $10,000 to Penske as a result of these intercompany sales. Penske has a gross profit rate of 40%.

On January 1, 2011, Penske sells equipment having a net book value of $50,000 to Stock for $90,000. The equipment has a 5-year useful life and is depreciated using the straight-line method.

On January 1, 2013, Stock sells equipment to Penske at a profit of $25,000. The equipment has a 5-year useful life and is depreciated using the straight-line method. Penske and Stock do not qualify as an affiliated group for tax purposes and, thus, will file separate tax returns. Assume a 40% corporate tax rate and an 80% dividends received exclusion.

On December 31, 2013, Penske and Stock have the following trial balances:

1. Prepare a value analysis and a determination and distribution of excess schedule.

2. Prepare a consolidated worksheet for the year ended December 31, 2013. Include a provision for income tax and income distribution schedules.