Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $495,000 in cash. The subsidiary's stockholders' equity accounts totaled $479,000 and the noncontrolling interest had a fair value of $55,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $47,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life).

Brey reported net income from its own operations of $81,000 in 2016 and $97,000 in 2017. Brey declared dividends of $27,500 in 2016 and $31,500 in 2017.

Year	Cost to Brey			Transfer Price to Pitino			Inventory Remaining at Year-End (at transfer price)
2016	$	86,000		$	200,000		$	42,000
2017		110,000			220,000			54,000
2018		147,000			245,000			45,000

At December 31, 2018, Pitino owes Brey $33,000 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	$	(896,000	)		$	(451,000	)
Cost of goods sold		532,000				226,000
Expenses		187,100				92,000
Equity in earnings of Brey		(119,970	)			0
Net income	$	(296,870	)		$	(133,000	)
Retained earnings, 1/1/18	$	(522,000	)		$	(312,000	)
Net income (above)		(296,870	)			(133,000	)
Dividends declared		146,000				53,000
Retained earnings, 12/31/18	$	(672,870	)		$	(392,000	)
Cash and receivables	$	163,000			$	115,000
Inventory		340,000				221,000
Investment in Brey		634,410				0
Land, buildings, and equipment (net)		981,000				345,000
Total assets	$	2,118,410			$	681,000
Liabilities	$	(845,540	)		$	(3,000	)
Common stock		(600,000	)			(286,000	)
Retained earnings, 12/31/18		(672,870	)			(392,000	)
Total liabilities and equity	$	(2,118,410	)		$	(681,000	)

1. What was the annual amortization resulting from the acquisition-date fair-value allocations?

2. Were the intra-entity transfers upstream or downstream?

3. What intra-entity gross profit in inventory existed as of January 1, 2018?

4. What intra-entity gross profit in inventory existed as of December 31, 2018?

5. What amounts make up the $119,970 Equity Earnings of Brey account balance for 2018?

6. What is the net income attributable to the noncontrolling interest for 2018?

7. What amounts make up the $634,410 Investment in Brey account balance as of December 31, 2018?

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

9. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.