Pitino acquired 90 percent of Breys outstanding shares on January 1, 2013, in exchange for $459,000 in cash. The subsidiarys stockholders equity accounts totaled $443,000 and the noncontrolling interest had a fair value of $51,000 on that day. However, a building (with a ten-year remaining life) in Breys accounting records was undervalued by $39,000. Pitino assigned the rest of the excess fair value over book value to Breys patented technology (four-year remaining life).

Brey reported net income from its own operations of $77,000 in 2013 and $93,000 in 2014. Brey declared dividends of $25,500 in 2013 and $29,500 in 2014.

Brey sells inventory to Pitino as follows:

Year	Cost to Brey			Transfer Price to Pitino			Inventory Remaining at Year-End (at transfer price)
2013	$	82,000		$	180,000		$	38,000
2014		100,000			200,000			50,500
2015		123,750			225,000			60,000

At December 31, 2015, Pitino owes Brey $29,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2015, and the year then ended. Note: Parentheses indicate a credit balance.

	Pitino			Brey
Sales revenues	$	(888,000	)	$	(431,000	)
Cost of goods sold		528,000			222,000
Expenses		186,700			84,000
Equity in earnings of Brey		(101,115	)		0
Net income	$	(274,415	)	$	(125,000	)
Retained earnings, 1/1/15	$	(514,000	)	$	(304,000	)
Net income (above)		(274,415	)		(125,000	)
Dividends declared		142,000			32,000
Retained earnings, 12/31/15	$	(646,415	)	$	(397,000	)
Cash and receivables	$	159,000		$	111,000
Inventory		320,000			201,000
Investment in Brey		592,470			0
Land, buildings, and equipment (net)		977,000			360,000
Total assets	$	2,048,470		$	672,000
Liabilities	$	(822,055	)	$	(21,000	)
Common stock		(580,000	)		(254,000	)
Retained earnings, 12/31/15		(646,415	)		(397,000	)
Total liabilities and equity	$	(2,048,470	)	$	(672,000	)

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

b.

Were the intra-entity transfers upstream or downstream?

	Downstream
	Upstream

c.	What unrealized gross profit existed as of January 1, 2015?

d.	What unrealized gross profit existed as of December 31, 2015?