Pitino acquired 80 percent of Brey's outstanding shares on January 1, 2016, in exchange for $320,000 in cash. The subsidiary's stockholders' equity accounts totaled $304,000 and the noncontrolling interest had a fair value of $80,000 on that day. However, a building (with a eight-year remaining life) in Brey's accounting records was undervalued by $37000. 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 $76,000 in 2016 and $92,000 in 2017. Brey declared dividends of $25,000 in 2016 and $29,000 in 2017 Inventory Remaining at Year-End (at transfer price) Transfer Price to Pitino Year 2016 2017 2018 Cost to Brey $ 81,000 107,250 132,00 $ 175,000 $ 37,000 195,000 220,000 49,500 55,000 At December 31, 2018, Pitino owes Brey $28,000 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
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