On January 1, 2016, Aspen Company acquired 80 percent of Birch Company's voting stock for $402,000. Birch reported a $397,500 book value and the fair value of the noncontrolling interest was $100,500 on that date. Then, on January 1, 2017, Birch acquired 80 percent of Cedar Company for $156,000 when Cedar had a $123,000 book value and the 20 percent noncontrolling interest was valued at $39,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life.

These companies report the following financial information. Investment income figures are not included.

201620172018

Sales:

Aspen Company$552,500$605,000$855,000

Birch Company292,000322,000554,100

Cedar CompanyNot available204,000 215,400

Expenses:

Aspen Company$452,500 $507,500$677,500

Birch Company228,000251,000465,000

Cedar CompanyNot available186,000184,000

Dividends declared:

Aspen Company$18,000$40,000$50,000

Birch Company 10,00018,00018,000

Cedar CompanyNot available2,00010,000

Assume that each of the following questions is independent:

1. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account?
2. What is the consolidated net income for this business combination for 2018?
3. What is the net income attributable to the noncontrolling interest in 2018?
4. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:

DateAmount

12/31/16 $13,200

12/31/17 $25,500

12/31/18 $30,500

What is the accrual-based net income of Birch in 2017 and 2018, respectively?