Pitino acquired 80 percent of Brey's outstanding shares onJanuary 1, 2019, in exchange for $369,000 in cash. The subsidiary'sstockholders' equity accounts totaled $353,000, and thenoncontrolling interest had a fair value of $92,250 on that day.However, a building (with a ten-year remaining life) in Brey'saccounting records was undervalued by $19,000. Pitino assigned therest of the excess fair value over book value to Brey's patentedtechnology (five-year remaining life).
Brey reported net income from its own operations of $67,000 in2019 and $83,000 in 2020. Brey declared dividends of $18,000 in2019 and $22,000 in 2020.
Brey sells inventory to Pitino as follows:
| Year | Cost to Brey | Transfer Price to Pitino | Inventory Remaining at Year-End (at transferprice) |
| 2019 | $ | 72,000 | | $ | 130,000 | | $ | 28,000 | |
| 2020 | | 97,500 | | | 150,000 | | | 40,500 | |
| 2021 | | 87,500 | | | 175,000 | | | 50,000 | |
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At December 31, 2021, Pitino owes Brey $19,000 for inventoryacquired during the period.
The following separate account balances are for these twocompanies for December 31, 2021, and the year then ended.
Note: Parentheses indicate a credit balance.
| Pitino | Brey |
| Sales revenues | $ | (868,000 | ) | | $ | (381,000 | ) |
| Cost of goods sold | | 518,000 | | | | 212,000 | |
| Expenses | | 185,700 | | | | 64,000 | |
| Equity in earnings of Brey | | (59,540 | ) | | | 0 | |
| Net income | $ | (223,840 | ) | | $ | (105,000 | ) |
| Retained earnings, 1/1/21 | $ | (494,000 | ) | | $ | (284,000 | ) |
| Net income (above) | | (223,840 | ) | | | (105,000 | ) |
| Dividends declared | | 132,000 | | | | 22,000 | |
| Retained earnings, 12/31/21 | $ | (585,840 | ) | | $ | (367,000 | ) |
| Cash and receivables | $ | 149,000 | | | $ | 101,000 | |
| Inventory | | 270,000 | | | | 151,000 | |
| Investment in Brey | | 456,000 | | | | 0 | |
| Land, buildings, and equipment (net) | | 967,000 | | | | 331,000 | |
| Total assets | $ | 1,842,000 | | | $ | 583,000 | |
| Liabilities | $ | (726,160 | ) | | $ | (37,000 | ) |
| Common stock | | (530,000 | ) | | | (179,000 | ) |
| Retained earnings, 12/31/21 | | (585,840 | ) | | | (367,000 | ) |
| Total liabilities and equity | $ | (1,842,000 | ) | | $ | (583,000 | ) |
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What was the annual amortization resulting from theacquisition-date fair-value allocations?
Were the intra-entity transfers upstream or downstream?
What intra-entity gross profit in inventory existed as ofJanuary 1, 2021?
What intra-entity gross profit in inventory existed as ofDecember 31, 2021?
What amounts make up the $59,540 Equity Earnings of Brey accountbalance for 2021?
What is the net income attributable to the noncontrollinginterest for 2021?
What amounts make up the $456,000 Investment in Brey accountbalance as of December 31, 2021?
Prepare the 2021 worksheet entry to eliminate the subsidiary’sbeginning owners’ equity balances.
Without preparing a worksheet or consolidation entries,determine the consolidation balances for these two companies.
I ONLY NEED QUESTIONS 7,8, AND 9
