Question

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	$	(990,000	)		$	(790,000	)		$	(1,622,000	)
Cost of goods sold		595,000				495,000				946,000
Operating expenses		138,000				157,000				298,000
Income of Syber		(103,300	)			0				0
Separate company net income	$	(360,300	)		$	(138,000	)
Consolidated net income									$	(378,000	)
Net income attributable to noncontrolling interest										17,700
Net income attributable to Parson Company									$	(360,300	)
Retained earnings, 1/1/18	$	(640,100	)		$	(328,000	)		$	(640,100	)
Net income (above)		(360,300	)			(138,000	)			(360,300	)
Dividends declared		68,000				49,000				68,000
Retained earnings, 12/31/18	$	(932,400	)		$	(417,000	)		$	(932,400	)
Cash and receivables	$	488,000			$	99,000			$	561,200
Inventory		209,000				198,000				388,000
Investment in Syber Company		446,400				0				0
Land, buildings, and equipment		418,000				317,000				735,000
Trademarks		0				0				32,500
Total assets	$	1,561,400			$	614,000			$	1,716,700
Liabilities	$	(365,000	)		$	(119,000	)		$	(423,800	)
Common stock		(215,000	)			(78,000	)			(215,000	)
Additional paid-in capital		(49,000	)			0				(49,000	)
Noncontrolling interest in Syber		0				0				(96,500	)
Retained earnings (above)		(932,400	)			(417,000	)			(932,400	)
Total liabilities and equities	$	(1,561,400	)		$	(614,000	)		$	(1,716,700	)
What was the ending Noncontrolling Interest in Syber Company computed?

Answer 1

What was the ending Noncontrolling Interest in Syber Company computed?
Book value of subsidiary—1/1 ($328,000 + $78000)	$406,000.00
Unrealized gross profit in beginning inventory (calculated below)	$5,000.00
Realized book value	$401,000.00
Excess allocation at 1/1 ($298000 - ($138,000 + $157,000) + 32500	$35,500.00
Subsidiary valuation basis 1/1	$436,500.00
Noncontrolling interest percentage	20.00%
Noncontrolling interest 1/1		$87,300.00
Noncontrolling interest in Soludan's income (as reported)		$17,700.00
Noncontrolling interest in Soludan's dividends ($49,000 × 20%)		-$9,800.00
Ending noncontrolling interest		$95,200.00

Balance of intra entity Gross profit ($407,000 - $388,000)	$19,000.00
$388,000 figure reported for consolidated inventory rather than the $407,000 total for the two companies.
Intra entry inventory sales = (990000+790000) -1622000	$158,000.00
Consolidated cost of goods sold is decreased by $158,000 to (595000+495000-$158000 = $932,000 ) in eliminating intra-entity sales
The increase of $19,000 created by the ending unrealized gross profit would then leave a $951,000 balance. Because $946,000 is the ending balance reported for consolidated cost of goods sold, an $5,000 unrealized gross profit must have been deferred from the previous year