Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ (760,000 ) $ (552,000 ) $ (1,185,000 )
Cost of goods sold 490,000 424,000 797,000
Operating expenses 93,000 99,000 194,300
Income of Syber (13,360 ) 0 0
Separate company net income $ (190,360 ) $ (29,000 )
Consolidated net income $ (193,700 )
Net income attributable to noncontrolling interest 3,340
Net income attributable to Parson Company $ (190,360 )
Retained earnings, 1/1/21 $ (506,920 ) $ (284,000 ) $ (506,920 )
Net income (above) (190,360 ) (29,000 ) (190,360 )
Dividends declared 66,000 29,000 66,000
Retained earnings, 12/31/21 $ (631,280 ) $ (284,000 ) $ (631,280 )
Cash and receivables $ 292,000 $ 88,000 $ 363,000
Inventory 190,000 149,000 322,000
Investment in Syber Company 295,920 0 0
Land, buildings, and equipment 418,000 353,000 771,000
Trademarks 0 0 29,900
Total assets $ 1,195,920 $ 590,000 $ 1,485,900
Liabilities $ (406,640 ) $ (233,000 ) $ (622,640 )
Common stock (127,000 ) (73,000 ) (127,000 )
Additional paid-in capital (31,000 ) 0 (31,000 )
Noncontrolling interest in Syber 0 0 (73,980 )
Retained earnings (above) (631,280 ) (284,000 ) (631,280 )
Total liabilities and equities $ (1,195,920 ) $ (590,000 ) $ (1,485,900 )

What method does Parson use to account for its investment in Syber?

What is the balance of the intra-entity inventory gross profit deferred at the end of the current period?

What amount was originally allocated to the trademarks?

What is the amount of the current-year intra-entity inventory sales?

Were the intra-entity inventory sales made upstream or downstream?

What is the balance of the intra-entity liability at the end of the current year?

What amount of intra-entity gross profit was deferred from the preceding period and recognized in the current period?

What was the ending Noncontrolling Interest in Syber Company computed?

With a tax rate of 21 percent, what income tax journal entry is recorded if the companies prepare a consolidated tax return?

With a tax rate of 21 percent, what income tax journal entry is recorded if these two companies prepare separate tax returns?

image text in transcribedimage text in transcribed

Please I need help for this question

\begin{tabular}{|l|l|} \hline a. & Method that Parson use to account for its investment \\ \hline b. & Balance of the intra-entity inventory gross profit \\ \hline c. & Amount allocated to trademarks \\ \hline d. & Current year intra-entity inventory sales \\ \hline e. & Intra-entity inventory sales made \\ \hline f. & Balance of the intra-entity liability \\ \hline g. & Intra-entity gross profit was deferred from the preceding period \\ \hline h. & Ending noncontrolling interest \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

3rd Edition

9780078025525, 9780077517359, 77517350, 978-0077398194

More Books

Students also viewed these Accounting questions

Question

Explain how cultural differences affect business communication.

Answered: 1 week ago

Question

List and explain the goals of business communication.

Answered: 1 week ago