Palmer acquired 90% of Sutton in January of year 1. In allocating the newly acquired subsidiary's fair value at the acquistion date, Palmer noted that Sutton had developed a manufacturing process that was worth approximatly $78,000 (because the process had been developed internally, no value had been assigned or recorded in the accounting records). The process was deemed to have 4 years of remaining value. Any remaining excess fair value over Sutton's book value was atrributed to goodwill. During year 2, Sutton sold inventory costing $130,000 to Palmer for $180,000. Of this amount, 10% remained unsold in Palmer's warehouse at the end of year 2.

Required:

a) compute the balance of inventory as it would appear on Palmer's consolidated financial statements for year 2.

b) compute the balance of sales as it would appear on Palmer's consolidated financial statements for year 2.

c) compute the balance of cost of goods sold as it would appear on Palmer's consolidated financial statements for year 2.

d) If there was any gross profit deferral, how would it be allocated? All to Palmer? All to the noncontrolling interest? Allocated between Palmer and the noncontrolling interest?