itino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $360,000 in cash. The subsidiary's stockholders' equity accounts totaled $344,000 and the noncontrolling interest had a fair value of $40,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $17,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life).

Brey reported net income from its own operations of $66,000 in 2016 and $82,000 in 2017. Brey declared dividends of $20,000 in 2016 and $24,000 in 2017.

Year	Cost to Brey			Transfer Price to Pitino			Inventory Remaining at Year-End (at transfer price)
2016	$	71,000		$	125,000		$	27,000
2017		72,500			145,000			39,500
2018		93,500			170,000			45,000

At December 31, 2018, Pitino owes Brey $18,000 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	$	(866,000	)		$	(376,000	)
Cost of goods sold		517,000				211,000
Expenses		185,600				62,000
Equity in earnings of Brey		(84,870	)			0
Net income	$	(248,270	)		$	(103,000	)
Retained earnings, 1/1/18	$	(492,000	)		$	(282,000	)
Net income (above)		(248,270	)			(103,000	)
Dividends declared		131,000				21,000
Retained earnings, 12/31/18	$	(609,270	)		$	(364,000	)
Cash and receivables	$	148,000			$	100,000
Inventory		265,000				146,000
Investment in Brey		487,035				0
Land, buildings, and equipment (net)		966,000				330,000
Total assets	$	1,866,035			$	576,000
Liabilities	$	(731,765	)		$	(46,000	)
Common stock		(525,000	)			(166,000	)
Retained earnings, 12/31/18		(609,270	)			(364,000	)
Total liabilities and equity	$	(1,866,035	)		$	(576,000	)

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

2. Were the intra-entity transfers upstream or downstream?

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

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

5. What amounts make up the $84,870 Equity Earnings of Brey account balance for 2018?

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

7. What amounts make up the $487,035 Investment in Brey account balance as of December 31, 2018?

8. Prepare the 2018 worksheet entry to eliminate the subsidiarys beginning owners equity balances.

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