Parson Company acquired an 80 percent interest in Syber Company on January 1, 2020. Any portion of Syber'sbusiness fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset hassubsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entityinventory sales transpired between the two companies. No payment has yet been made on the latest transfer. Alldividends are paid in the same period as declared.The individual financial statements for the two companies as well as consolidated totals for 2021 follow (creditbalances indicated by parentheses): SyberCompany$(600,000)400,000100,000ParsonConsolidatedTotalsCompany$ (800,000)500,000$(1,280,000)784,000202,500SalesCost of goods soldOperating expensesIncome of Syber100,000(74,800)$ (274,800)Separate company net income$(100,000)(293,500)18,700(274,800)Consolidated net income$Net income attributable to noncontrolling interest2$Net income attributable to Parson CompanyRetained earnings, 1/1/21Net income (above)$ (611,600)(274,800)$(290,000)(100,000)30,000$(360,000)$(611,600)(274,800)Dividends declared70,000(816,400)70,000(816,400)Retained earnings, 12/31/212$$ 80,000160,000298,000190,000368,400380,000Cash and receivables358,000InventoryInvestment in Syber CompanyLand, buildings, and equipment338,000260,000640,000Trademarks32,500$ 1,368,500$ 500,000$ (60,000)(80,000)Total assets$ 1,236,400$(270,000)(120,000)(30,000)$(310,000)(120,000)(30,000)(92,100)(816,400)LiabilitiesCommon stockAdditional paid-in capitalNoncontrolling interest in SyberRetained earnings (above)(816,400)(360,000)Total liabilities and equities$(1,236,400)$(500,000)$(1,368,500)a. What method does Parson use to account for its investment in Syber?b. What is the balance of the intra-entity inventory gross profit deferred at the end of the current period?c. What amount was originally allocated to the trademarks?d. What is the amount of the current-year intra-entity inventory sales?e. Were the intra-entity inventory sales made upstream or downstream?f. What is the balance of the intra-entity liability at the end of the current year?g. What amount of intra-entity gross profit was deferred from the preceding period and recognized in the currentperiod?h. What was the ending Noncontrolling Interest in Syber Company computed?i. With a tax rate of 21 percent, what income tax journal entry is recorded if the companies prepare a consolidatedtax return?j. With a tax rate of 21 percent, what income tax journal entry is recorded if these two companies prepare separatetax returns?

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3ybel business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asse subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-en inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. dividends are paid in the same period as declared.

3ybel business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asse subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-en inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. dividends are paid in the same period as declared.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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