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Pitino acquired 90 percent of Breys outstanding shares on January 1, 2013, in exchange for $504,000 in cash. The subsidiarys stockholders equity accounts totaled $488,000 and the noncontrolling interest had a fair value of $56,000 on that day. However, a building (with a ten-year remaining life) in Breys accounting records was undervalued by $49,000. Pitino assigned the rest of the excess fair value over book value to Breys patented technology (four-year remaining life).

Brey reported net income from its own operations of $82,000 in 2013 and $98,000 in 2014. Brey declared dividends of $28,000 in 2013 and $32,000 in 2014.

Brey sells inventory to Pitino as follows:

Year	Cost to Brey			Transfer Price to Pitino			Inventory Remaining at Year-End (at transfer price)
2013	$	87,000		$	205,000		$	43,000
2014		146,250			225,000			55,000
2015		137,500			250,000			50,000

At December 31, 2015, Pitino owes Brey $34,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2015, and the year then ended. Note: Parentheses indicate a credit balance.

	Pitino			Brey
Sales revenues	$	(898,000	)	$	(456,000	)
Cost of goods sold		533,000			227,000
Expenses		187,200			94,000
Equity in earnings of Brey		(108,990	)		0
Net income	$	(286,790	)	$	(135,000	)
Retained earnings, 1/1/15	$	(524,000	)	$	(314,000	)
Net income (above)		(286,790	)		(135,000	)
Dividends declared		147,000			54,000
Retained earnings, 12/31/15	$	(663,790	)	$	(395,000	)
Cash and receivables	$	164,000		$	116,000
Inventory		345,000			250,000
Investment in Brey		635,895			0
Land, buildings, and equipment (net)		982,000			346,000
Total assets	$	2,126,895		$	712,000
Liabilities	$	(858,105	)	$	(23,000	)
Common stock		(605,000	)		(294,000	)
Retained earnings, 12/31/15		(663,790	)		(395,000	)
Total liabilities and equity	$	(2,126,895	)	$	(712,000	)

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

b.	Were the intra-entity transfers upstream or downstream?
	Downstream Upstream

c.	What unrealized gross profit existed as of January 1, 2015?

d.	What unrealized gross profit existed as of December 31, 2015?

e.	What amounts make up the $108,990 equity earnings of Brey account balance for 2015?

f.	What is the net income attributable to the noncontrolling interest for 2015?

g.	What amounts make up the $635,895 Investment in Brey account balance as of December 31, 2015?

h.	Prepare the 2015 worksheet entry to eliminate the subsidiarys beginning owners equity balances. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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

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