On January 1, 2017, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $372,000. Stinsons book value on that date consisted of common stock of $100,000 and retained earnings of $220,000. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $248,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the companys accounting records by $70,000 and an unrecorded customer list (15-year remaining life) assessed at a $45,000 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	$120,000	$150,000	$50,000
2018	112,000	160,000	40,000

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

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	McIlroy, Inc.	Stinson, Inc.
Sales	$ (700,000)	$(335,000)
Cost of goods sold	460,000	205,000
Operating expenses	188,000	70,000
Equity in earnings in Stinson	(28,000)	0
Net income	$ (80,000)	$ (60,000)
Retained earnings, 1/1/18	$ (695,000)	$(280,000)
Net income	(80,000)	(60,000)
Dividends declared	45,000	15,000
Retained earnings, 12/31/18	$ (730,000)	$(325,000)
Cash and receivables	$ 248,000	$ 148,000
Inventory	233,000	129,000
Investment in Stinson	411,000	0
Buildings (net)	308,000	202,000
Equipment (net)	220,000	86,000
Patents (net)	0	20,000
Total assets	$ 1,420,000	$ 585,000
Liabilities	$ (390,000)	$(160,000)
Common stock	(300,000)	(100,000)
Retained earnings, 12/31/18	(730,000)	(325,000)
Total liabilities and equities	$(1,420,000)	$(585,000)

Show how McIlroy determined the $411,000 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinsons income.

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

Acquisition-date fair value allocation and excess amortizations a. Consideration transferred Noncontrolling interest fair value Subsidiary fair value at acquisition-date Acquisition-date book value Fair value in excess of book value Annual Excess Life in Years Amortizations Excess fair value assignments to patents to customer lis to goodwill Determination of Investment in Stinson account balance Consideration transferred Increase in Stinson's retained earnings Excess fair value amortization 2017 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2018 (calculate below) Stinson 2018 dividends declared to Mcllroy Page1 Investment account balance 12/31/18 Stinson's 2018 income Excess fair value amortization Adjusted net income Mcllroy's percentage ownership Mcllroy's share of Stinson's adjusted net income 2017 Intra-entity inventory profit recognized (calculate below) 2018 Intra-entity inventory profit deferred (calculate below) Mcllroy's equity in earnings of Stinson Intra-entity profits (downstream) Intra-entity transfers remaining in inventory Gross profit rate 2017 2018