Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $567,000 in cash. The subsidiary's stockholders' equity accounts totaled $551,000 and the noncontrolling interest had a fair value of $63,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $38,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life).

Brey reported net income from its own operations of $89,000 in 2016 and $105,000 in 2017. Brey declared dividends of $31,500 in 2016 and $35,500 in 2017.

Year	Cost to Brey			Transfer Price to Pitino			Inventory Remaining at Year-End (at transfer price)
2016	$	94,000		$	240,000		$	50,000
2017		143,000			260,000			62,000
2018		171,000			285,000			65,000

At December 31, 2018, Pitino owes Brey $41,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.

Note: Parentheses indicate a credit balance.

	Pitino				Brey
Sales revenues	$	(912,000	)		$	(491,000	)
Cost of goods sold		540,000				234,000
Expenses		187,900				108,000
Equity in earnings of Brey		(125,010	)			0
Net income	$	(309,110	)		$	(149,000	)
Retained earnings, 1/1/18	$	(538,000	)		$	(328,000	)
Net income (above)		(309,110	)			(149,000	)
Dividends declared		154,000				61,000
Retained earnings, 12/31/18	$	(693,110	)		$	(416,000	)
Cash and receivables	$	171,000			$	123,000
Inventory		380,000				310,000
Investment in Brey		704,700				0
Land, buildings, and equipment (net)		989,000				353,000
Total assets	$	2,244,700			$	786,000
Liabilities	$	(911,590	)		$	(20,000	)
Common stock		(640,000	)			(350,000	)
Retained earnings, 12/31/18		(693,110	)			(416,000	)
Total liabilities and equity	$	(2,244,700	)		$	(786,000	)

h. Prepare the 2018 worksheet entry to eliminate the subsidiarys beginning owners equity balances

Consolidation Worksheet Entries

• Prepare entry S

Note: Enter debits before credits.

Transaction	Accounts	Debit	Credit
1