50 House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: 2.85 points Consideration transferred for 70% interest in Wilson Fair value of the 30% noncontrolling interest Wilson business fair value $ 875,000 375,000 $ 1,250,000 Wilson book value Excess fair value over book value $ 856,000 394,000 eBook Assignments to adjust Wilson's assets to fair value: To buildings (20-year remaining life) To equipment (4-year remaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 154,000 (30,400) 72,500 $ 196,100 197,900 Print References House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2019 and 2020 and related ending inventory balances follow: Year 2019 2020 Intra-Entity Purchases $105,000 137,500 Remaining Intra-Entity Inventory- End of Year (at transfer price) $35,000 55,000 On January 1, 2021, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock. The total price of these shares was $312,000, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2021, House acquired additional inventory from Wilson at a price of $295,000. Of this merchandise, 45 percent is still held at year-end. Following are the financial records for the three companies for 2021. House Corporation Wilson Company Sales and other revenues Cost of goods sold Operating expenses Income of Wilson Company $ (1,021,760) $ (859,200) $ Cuddy Company (390,400) 576,000 370,000 216,000 285,000 290,000 99,900 (139,440) 0 0 Income of Cuddy Company Net income Net income (above) (29,800) $ (330,000) $ (29,800) (229,000) $ 0 (74,500) Retained earnings, 1/1/21 $ (851,000) Dividends declared (330,000) 100,000 Retained earnings, 12/31/21 $ (1,081,000) $ $ (688,000) (229,000) 96,000 (821,000) $ (240,000) (74,500) 50,000 $ (264,500) Cash and receivables $ Inventory 38,610 432,950 $ 275,200 $ 72,500 320,000 260,700 Investment in Wilson Company 1,046,640 0 0 Investment in Cuddy Company 165,800 165,800 0 Buildings 424,000 410,000 166,000 Equipment 251,000 212,000 88,700 Land 201,000 352,000 21,600