On January 1, 2017, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $351,600. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $207,900. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $234,400. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $88,600 and an unrecorded customer list (15-year remaining life) assessed at a $64,500 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, McIlroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year end, there are no intra-entity payables or receivables.

Intra-entity inventory sales between the two companies have been made as follows:

Year	Cost to McIlroy	Transfer Price to Stinson	Ending Balance (at transfer price)
2017	$138,900	$173,625	$57,875
2018	113,400	151,200	37,800

The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow:

	McIlroy, Inc.				Stinson, Inc.
Sales	$	(765,000	)		$	(406,000	)
Cost of goods sold		502,800				247,600
Operating expenses		203,285				84,200
Equity in earnings in Stinson		(38,749	)			0
Net income	$	(97,664	)		$	(74,200	)
Retained earnings, 1/1/18	$	(850,200	)		$	(286,600	)
Net income		(97,664	)			(74,200	)
Dividends declared		52,000				21,500
Retained earnings, 12/31/18	$	(895,864	)		$	(339,300	)
Cash and receivables	$	304,600			$	154,500
Inventory		286,200				134,500
Investment in Stinson		405,198				0
Buildings (net)		377,000				208,800
Equipment (net)		269,000				92,300
Patents (net)		0				27,300
Total assets	$	1,641,998			$	617,400
Liabilities	$	(446,134	)		$	(178,100	)
Common stock		(300,000	)			(100,000	)
Retained earnings, 12/31/18		(895,864	)			(339,300	)
Total liabilities and equities	$	(1,641,998	)		$	(617,400	)

1. Show how McIlroy determined the $405,198 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinsons income.

2. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2018.

Please also show how goodwill is allocated and b.v. at acquisition is solved.