Calculating Consolidated Amounts: Land and Building Transfer — Upstream Sya Inc., a 100%-

owned subsidiary of Pya Inc., manufactures and installs air conditioning systems. Sya’s sales are normally to third parties, but during 2004, Pya contracted with Sya to install an air conditioning system in its new corporate headquarters. Sya charged Pya $750,000 for the system and a

$125,000 installation fee. Sya’s manufacturing cost was $500,000, and its installation costs were

$75,000. Installation was completed on 1/2/05, at which time the billings were rendered. Pya as¬

signed a 25-year life to the system.

1. What amounts pertaining to the air conditioning system should be reported in the consolidated statements at 12/31/05? Insert your amounts in Pya’s column in the following table.

2. Without making formal consolidation or other entries, what debit and credit postings should be made to the following accounts in consolidation at 12/31/05?

Pya Inc. Sya Inc.

Income Statement Intercompany sales .

Intercompany cost of sales .

Intercompany installation fee income.

Intercompany installation fee expense Depreciation expense .

$ 750,000 (500,000) 125,000

(75,000)