Reference no: EM132217861

Problem - Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $513,000 in cash. The subsidiary's stockholders' equity accounts totaled $497,000 and the noncontrolling interest had a fair value of $57,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $51,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life).

Brey reported net income from its own operations of $83,000 in 2016 and $99,000 in 2017. Brey declared dividends of $28,500 in 2016 and $32,500 in 2017.

Year	Cost to Brey	Transfer Price to Pitino	Inventory Remaining at Year-End (at transfer price)
2016	$88,000	$210,000	$44,000
2017	161,000	230,000	56,500
2018	127,500	255,000	55,000

At December 31, 2018, Pitino owes Brey $35,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.

Note: Parentheses indicate a credit balance.

	Pitino	Brey
Sales revenues	$(900,000)	$(461,000)
Cost of goods sold	534,000	228,000
Expenses	187,300	96,000
Equity in earnings of Brey	(105,255)	0
Net income	$(283,955)	$(137,000)
Retained earnings, 1/1/18	$(526,000)	$(316,000)
Net income (above)	(283,955)	(137,000)
Dividends declared	148,000	55,000
Retained earnings, 12/31/18	4(661,955)	$(398,000)
Cash and receivables	$165,000	117,000
Inventory	350,000	255,000
Investment in Brey	645,300	0
Land, buildings, and equipment (net)	983,000	347,000
Total assets	$2,143,300	$719,000
Liabilities	$(871,345)	$(19,000)
Common stock	(610,000)	(302,000)
Retained earnings, 12/31/18	(661,955)	(398,000)
Total liabilities and equity	$(2,143,300)	(719,000)

What was the annual amortization resulting from the acquisition-date fair-value allocations?

Were the intra-entity transfers upstream or downstream?

What intra-entity gross profit in inventory existed as of January 1, 2018?

What intra-entity gross profit in inventory existed as of December 31, 2018?

What amounts make up the $105,255 Equity Earnings of Brey account balance for 2018?

What is the net income attributable to the noncontrolling interest for 2018?

What amounts make up the $645,300 Investment in Brey account balance as of December 31, 2018?

Prepare the 2018 worksheet entry to eliminate the subsidiaryâ€TMs beginning ownersâ€TM equity balances.

Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.