Parson Company acquired an 80 percent interest in Syber Company on January 1, 2017. 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 2018 follow:

	Parson Company				Syber Company				Consolidated Totals
Sales	$	(840,000	)		$	(640,000	)		$	(1,352,000	)
Cost of goods sold		520,000				420,000				818,000
Operating expenses		108,000				112,000				222,500
Income of Syber		(80,800	)			0				0
Separate company net income	$	(292,800	)		$	(108,000	)
Consolidated net income									$	(311,500	)
Net income attributable to noncontrolling interest										18,700
Net income attributable to Parson Company									$	(292,800	)
Retained earnings, 1/1/18	$	(617,600	)		$	(298,000	)		$	(617,600	)
Net income (above)		(292,800	)			(108,000	)			(292,800	)
Dividends declared		74,000				34,000				74,000
Retained earnings, 12/31/18	$	(836,400	)		$	(372,000	)		$	(836,400	)
Cash and receivables	$	338,000			$	84,000			$	399,200
Inventory		194,000				168,000				350,500
Investment in Syber Company		380,400				0				0
Land, buildings, and equipment		388,000				272,000				660,000
Trademarks		0				0				32,500
Total assets	$	1,300,400			$	524,000			$	1,442,200
Liabilities	$	(290,000	)		$	(68,000	)		$	(337,600	)
Common stock		(140,000	)			(84,000	)			(140,000	)
Additional paid-in capital		(34,000	)			0				(34,000	)
Noncontrolling interest in Syber		0				0				(94,200	)
Retained earnings (above)		(836,400	)			(372,000	)			(836,400	)
Total liabilities and equities	$	(1,300,400	)		$	(524,000	)		$	(1,442,200	)

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

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

3. What amount was originally allocated to the trademarks?

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

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

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

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

8. What was the ending Noncontrolling Interest in Syber Company computed?

9. With a tax rate of 40 percent, what income tax journal entry is recorded if the companies prepare a consolidated tax return?

10. With a tax rate of 40 percent, what income tax journal entry is recorded if these two companies prepare separate tax returns?

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 less A a. Method that Parson use to account for its investment b. C. d. Balance of the intra-entity inventory gross profit Amount allocated to trademarks Current year intra-entity inventory sales Intra-entity inventory sales made Balance of the intra-entity liability Intra-entity gross profit was deferred from the preceding period Ending noncontrolling interest Partial equity method $ 11,500 $ 37,500 $ 128,000 Upstream $ 20,400 $ 5,500 $ 122,500 X e. f. g h. Req A to H Req I and . With a tax rate of 40 percent, what income tax journal entry is recorded if the companies prepare a consolidated tax return? j. With a tax rate of 40 percent, what income tax journal entry is recorded if these two companies prepare separate tax returns? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less A No Transaction General Journal Debit Credit 1 1 124,600 Income tax expense Income tax payable 124.600 2 2 84,800 Income tax expense Income tax payable 84,800 3 3 Income tax expense Deferred income tax asset Income tax payable OOO 40,800 8,200 X