Attached is a worksheet containing the financial statements for Parrot for the year ending

December $31,2022$; for its two $80\%-$owned subsidiaries, Sumone and Sumother, on

December $31,2022,$ and for the year ending December $31,2022$; and the six$-$month

period from June $30$ to December $31,2022,$ respectively.

Parrot acquired Sumone on January $1,2019,$ for $$64,000.$ At that date, Sumone$$s

stockholders$$ equity comprised:

Common stock $$20,000$

Paid$-$in capital $$13,000$

Retained earnings $$22,000$

Sumone$$s inventory $($book value $$20,000$ fair value $$25,000)$ and plant $($the book value

cost $$50,000$ less accumulated depreciation $$10,000$ fair value $$55,000)$ were the only

assets that required revaluation at acquisition. The plant had a $10-$year remaining useful

life from the acquisition date and is still owned. The inventory was sold in $2020.$

Goodwill, if any, since that date does not require impairment. The value of the

noncontrolling interest at the acquisition date was determined to be $$15,000.$

Parrot acquired Sumother on June $30,2022,$ for $$94,000$ cash. At the acquisition date, the

balance sheet of Sumother was as shown in the worksheet provided to you. The only

asset of Sumother that had a value different from their book value was the inventory,

which had a fair value of $$40,000.$ Half of this inventory was sold by December $31,2022,$

and the balance is on hand. Goodwill, if appropriate, is also unimpaired since that date. In

this acquisition, the noncontrolling interest was valued at $$23,000.$

On January $1,2021,$ Parrot had sold the plant to Sumone for $$120,000.$ This plant had

originally cost Parrot $$140,000$ and had accumulated depreciation of $$40,000$ at the date

of disposal to Sumone. The plant had a five$-$year remaining useful life from the date of

transfer.

Sumone sells goods to other group members. Inventory sales by Sumone to Parrot in

$2022$ were $$40,000.$ Of these, $$16,000$ were unsold on December $31,2022.$ There were

$$20,000$ of goods held in Parrot$$s inventory on January $1,2022,$ arising from prior$-$year

purchases from Sumone. These were all sold outside the group in the current year.

Sumone uses a one$-$third markup on cost for all sales.

The unpaid inter$-$entity balance due to Sumone from Parrot included in receivables and

payables relating to the inventory sales was $$10,000$ on December $31,2022,$ and $$5,000$

on December $31,2021.$

In this question, all aspects of taxation may be ignored.

Parrot has used the cost $($original value$)$ method to account for its investments in the

attached worksheets.

PART $1(160$ points$)$

REQUIRED

$1.$ On the first worksheet, complete a consolidated balance worksheet for Parrot and

its subsidiary on December $31,2021.$

$2.$ Determine, by any means you wish, the figures that would be reported for the

Parrot Group in the $2022$ consolidated balance sheet, consolidated income

statement, and statement of stockholders$$ equity. $($A properly classified set of

financial statements is required with disclosure of the noncontrolling interest.

Comparative figures should be included for the balance sheet but are not required

for the other statements.$)$

PART $2(40$ points$)$

Additional Information: There were no fixed$-$asset sales in the year. Some new fixed

assets were acquired for cash. These will have to be determined by considering the

change in the fixed$-$asset accounts. No new long$-$term debt was issued by any of the

companies. Some long$-$term debt was repaid. There were no material non$-$cash

transactions.

REQUIRED

$3.$ Prepare in good form the consolidated statement of cash flows for the Parrot

Group for the year ending December $31,2022.$

GUIDANCE NOTE

You may amend any worksheet in any way that you wish. You may

create new worksheets if you wish.

As in professional practice, you must leave an audit trail of your

workings and processes to enable your supervisor to understand what

you are doing. The more logical your workings, the easier it will be for

your supervisor to assess partial credit for your efforts.

You may not collude with other students on this project. If there is any

evidence of collusion, you will be immediately excluded from this class,

and a grade of F will be awarded to all suspected participants.