Parson Company acquired an 80 percent interest in Syber Company on January 1, 2020. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses): Parson Company Syber Company Consolidated Totals Sales $ (744,000 ) $ (654,000 ) $ (1,223,000 ) Cost of goods sold 450,000 412,000 691,000 Operating expenses 104,000 107,000 213,300 Income of Syber (102,960 ) 0 0 Separate company net income $ (292,960 ) $ (135,000 ) Consolidated net income $ (318,700 ) Net income attributable to noncontrolling interest 25,740 Net income attributable to Parson Company $ (292,960 ) Retained earnings, 1/1/21 $ (592,320 ) $ (316,000 ) $ (592,320 ) Net income (above) (292,960 ) (135,000 ) (292,960 ) Dividends declared 63,000 27,000 63,000 Retained earnings, 12/31/21 $ (822,280 ) $ (424,000 ) $ (822,280 ) Cash and receivables $ 280,000 $ 78,000 $ 333,000 Inventory 194,000 154,000 335,000 Investment in Syber Company 418,320 0 0 Land, buildings, and equipment 414,000 345,000 759,000 Trademarks 0 0 29,900 Total assets $ 1,306,320 $ 577,000 $ 1,456,900 Liabilities $ (342,040 ) $ (71,000 ) $ (388,040 ) Common stock (112,000 ) (82,000 ) (112,000 ) Additional paid-in capital (30,000 ) 0 (30,000 ) Noncontrolling interest in Syber 0 0 (104,580 ) Retained earnings (above) (822,280 ) (424,000 ) (822,280 ) Total liabilities and equities $ (1,306,320 ) $ (577,000 ) $ (1,456,900 )

Parson Company acquired an 80 percent interest in Syber Company on January 1, 2020. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses): Parson Company Syber Company Consolidated Totals Sales $ (744,000 ) $ (654,000 ) $ (1,223,000 ) Cost of goods sold 450,000 412,000 691,000 Operating expenses 104,000 107,000 213,300 Income of Syber (102,960 ) 0 0 Separate company net income $ (292,960 ) $ (135,000 ) Consolidated net income $ (318,700 ) Net income attributable to noncontrolling interest 25,740 Net income attributable to Parson Company $ (292,960 ) Retained earnings, 1/1/21 $ (592,320 ) $ (316,000 ) $ (592,320 ) Net income (above) (292,960 ) (135,000 ) (292,960 ) Dividends declared 63,000 27,000 63,000 Retained earnings, 12/31/21 $ (822,280 ) $ (424,000 ) $ (822,280 ) Cash and receivables $ 280,000 $ 78,000 $ 333,000 Inventory 194,000 154,000 335,000 Investment in Syber Company 418,320 0 0 Land, buildings, and equipment 414,000 345,000 759,000 Trademarks 0 0 29,900 Total assets $ 1,306,320 $ 577,000 $ 1,456,900 Liabilities $ (342,040 ) $ (71,000 ) $ (388,040 ) Common stock (112,000 ) (82,000 ) (112,000 ) Additional paid-in capital (30,000 ) 0 (30,000 ) Noncontrolling interest in Syber 0 0 (104,580 ) Retained earnings (above) (822,280 ) (424,000 ) (822,280 ) Total liabilities and equities $ (1,306,320 ) $ (577,000 ) $ (1,456,900 )

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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Question

The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses):

	Parson Company		Syber Company	Consolidated Totals
Sales	$	(744,000	)	$	(654,000	)	$	(1,223,000	)
Cost of goods sold		450,000			412,000			691,000
Operating expenses		104,000			107,000			213,300
Income of Syber		(102,960	)		0			0
Separate company net income	$	(292,960	)	$	(135,000	)
Consolidated net income							$	(318,700	)
Net income attributable to noncontrolling interest								25,740
Net income attributable to Parson Company							$	(292,960	)
Retained earnings, 1/1/21	$	(592,320	)	$	(316,000	)	$	(592,320	)
Net income (above)		(292,960	)		(135,000	)		(292,960	)
Dividends declared		63,000			27,000			63,000
Retained earnings, 12/31/21	$	(822,280	)	$	(424,000	)	$	(822,280	)
Cash and receivables	$	280,000		$	78,000		$	333,000
Inventory		194,000			154,000			335,000
Investment in Syber Company		418,320			0			0
Land, buildings, and equipment		414,000			345,000			759,000
Trademarks		0			0			29,900
Total assets	$	1,306,320		$	577,000		$	1,456,900
Liabilities	$	(342,040	)	$	(71,000	)	$	(388,040	)
Common stock		(112,000	)		(82,000	)		(112,000	)
Additional paid-in capital		(30,000	)		0			(30,000	)
Noncontrolling interest in Syber		0			0			(104,580	)
Retained earnings (above)		(822,280	)		(424,000	)		(822,280	)
Total liabilities and equities	$	(1,306,320	)	$	(577,000	)	$	(1,456,900	)

Complete this question by entering your answers in the tabs below.
Req A to H
Req I and J
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 current period?
h. What was the ending Noncontrolling Interest in Syber Company computed?
Show lessA
Method that Parson use to account for its investment
Equity method
a.
b.
Balance of the intra-entity inventory gross profit
C.
Amount allocated to trademarks
d.
Current year intra-entity inventory sales
Intra-entity inventory sales made
Upstream
е.
f.
Balance of the intra-entity liability
g.
Intra-entity gross profit was deferred from the preceding period
h.
Ending noncontrolling interest
< Req A to H
Req I and J >

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