On January 1, 2017, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $384,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $227100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $256,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $73,300 and an unrecorded customer list (15-year remaining life) assessed at a $49,500 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy 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 Transfer Price to Stinson $154,500 150,800 Ending Balance (at transfer price) Year Cost to McIlroy 2017 2018 $123,600 113,100 $51,500 37,700 The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow: McIlroy, Inc. $(711,000) Stinson, Inc. $ (349,000) Sales Cost of goods sold Operating expenses Equity in earnings in Stinson 467,300 192,405 213,400 72,800 (32,177) $(83,472) $ (739,000) s (62,800) $ (281,100) Net income Retained earnings, 1/1/18 Net income (83,472) (62,800) 16, 100 46,200 $ (776,272) $ 264,400 248,400 422,239 322,000 230,000 Dividends declared s (327,800) $ 149,300 Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) 130,100 203,300 86,900 21,400 $ 591,000 Total assets $1,487,039 Liabilities Common stock Retained earnings, 12/31/18 $ (163,200) (100,000) 776,272)(327,800) s (591,000) (410,767) (300,000) Total liabilities and equities $ (1,487,039)