The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses): Sales Cost of goods sold. Operating expenses. income of Syber Separate company net income Consolidated net income Net income attributable to noncontrolling interest. Net income attributable to Parson Company Retained earnings, 1/1/21.. Net income (above) Dividends declared.. Retained earnings, 12/31/21. Cash and receivables. Inventory. Investment in Syber Company Land, buildings, and equipment. Trademarks Total assets Liabilities. Common stock Additional paid-in capital Noncontrolling interest in Syber. Retained earnings (above). Total liabilities and equities. Parson Company $ (800,000) 500,000 100,000 (74,800) $ (274,800) $ (611,600) (274,800) 70,000 $ (816,400) $ 298,000 190,000 368,400 380,000 -0- $ 1,236,400 $ (270,000) (120,000) (30.000) -0- (816,400) $(1,236,400) Syber Company $(600,000) 400,000 100,000 -0- $(100,000) $(290,000) (100,000) 30,000 $(360,000) $ 80,000 160,000 -0- 260,000 -0- $ 500,000 $ (60,000) (80,000) -0- -0- (360,000) $(500,000) Consolidated Totals c. What amount was originally allocated to the trademarks? d. What is the amount of the current-year intra-entity inventory sales? $(1,280,000) 784,000 202,500 $ (293,500) 18.700 $ (274,800) $ (611,600) (274,800) 70,000 $ (816,400) $ 358,000 338,000 -0- 640,000 32,500 $1,368,500 $ (310,000) (120,000) (30,000) (92,100) (816,400) $(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? 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. How 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 prepares a consolidated tax return? j. With a tax rate of 21 percent, what income tax journal entry is recorded if these two companies prepare separate tax returns?

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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The individual financial statements for the two companies as well as consolidated totals for
2021 follow (credit balances indicated by parentheses):
Sales..
Cost of goods sold.
Operating expenses.
Income of Syber
Separate company net income
Consolidated net income
Net income attributable to
noncontrolling interest.
Net income attributable to Parson
Company
Retained earnings, 1/1/21.1
Net income (above)
Dividends declared..
Retained earnings, 12/31/21.
Cash and receivables.
Inventory..
Investment in Syber Company
Land, buildings, and equipment.
Trademarks
Total assets
Liabilities..
Common stock
Additional paid-in capital.
Noncontrolling interest in Syber.
Retained earnings (above).
Total liabilities and equities.
Parson
Company
$ (800,000)
500,000
100,000
(74,800)
$ (274,800)
$ (611,600)
(274,800)
70,000
$ (816,400)
$ 298,000
190,000
368,400
380,000
-0-
$1,236,400
$ (270,000)
(120,000)
(30.000)
-0-
(816,400)
$(1,236,400)
29. On January 1, 2019 Alpha
Syber
Company
$(600,000)
400,000
100,000
-0-
$(100,000)
h.
i. With a tax rate of 21 percent, what income tax journal en
a consolidated tax return?
$(290,000)
(100,000)
30,000
$ (360,000)
$ 80,000
160,000
-0-
260,000
-0-
$ 500,000
$ (60,000)
(80,000)
-0-
-0-
(360,000)
$(500,000)
c. What amount was originally allocated to the trademarks?
d. What is the amount of the current-year intra-entity inventory sales?
Consolidated
Totals
$(1,280,000)
784,000
202,500
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?
$ (293,500)
18,700
$ (274,800)
$ (611,600)
(274,800)
70,000
$ (816,400)
$ 358,000
338,000
-0-
640,000
32,500
$1,368,500
$ (310,000)
(120,000)
(30,000)
(92,100)
(816,400)
$(1.368.500)
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?
How was the ending Noncontrolling Interest in Syber Company computed?
is recorded if the companies prepare
j. With a tax rate of 21 percent, what income tax journal entry is recorded if these two companies
prepare separate tax returns?
00
Transcribed Image Text:The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses): Sales.. Cost of goods sold. Operating expenses. Income of Syber Separate company net income Consolidated net income Net income attributable to noncontrolling interest. Net income attributable to Parson Company Retained earnings, 1/1/21.1 Net income (above) Dividends declared.. Retained earnings, 12/31/21. Cash and receivables. Inventory.. Investment in Syber Company Land, buildings, and equipment. Trademarks Total assets Liabilities.. Common stock Additional paid-in capital. Noncontrolling interest in Syber. Retained earnings (above). Total liabilities and equities. Parson Company $ (800,000) 500,000 100,000 (74,800) $ (274,800) $ (611,600) (274,800) 70,000 $ (816,400) $ 298,000 190,000 368,400 380,000 -0- $1,236,400 $ (270,000) (120,000) (30.000) -0- (816,400) $(1,236,400) 29. On January 1, 2019 Alpha Syber Company $(600,000) 400,000 100,000 -0- $(100,000) h. i. With a tax rate of 21 percent, what income tax journal en a consolidated tax return? $(290,000) (100,000) 30,000 $ (360,000) $ 80,000 160,000 -0- 260,000 -0- $ 500,000 $ (60,000) (80,000) -0- -0- (360,000) $(500,000) c. What amount was originally allocated to the trademarks? d. What is the amount of the current-year intra-entity inventory sales? Consolidated Totals $(1,280,000) 784,000 202,500 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? $ (293,500) 18,700 $ (274,800) $ (611,600) (274,800) 70,000 $ (816,400) $ 358,000 338,000 -0- 640,000 32,500 $1,368,500 $ (310,000) (120,000) (30,000) (92,100) (816,400) $(1.368.500) 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? How was the ending Noncontrolling Interest in Syber Company computed? is recorded if the companies prepare j. With a tax rate of 21 percent, what income tax journal entry is recorded if these two companies prepare separate tax returns? 00
28. 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 pay-
ment has yet been made on the latest transfer. All dividends are paid in the same period as declared.
Transcribed Image Text:28. 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 pay- ment has yet been made on the latest transfer. All dividends are paid in the same period as declared.
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