Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $342,000 in cash. The subsidiary's stockholders' equity accounts totaled $326,000 and the noncontrolling interest had a fair value of $38,000 on that day. However, a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $18,000. 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 $64,000 in 2016 and $80,000 in 2017. Brey declared dividends of $19,000 in 2016 and $23,000 in 2017.

Brey sells inventory to Pitino as follows:

Year	Cost to Brey			Transfer Price to Pitino			Inventory Remaining at Year-End (at transfer price)
2016	$	69,000		$	115,000		$	25,000
2017		81,000			135,000			37,500
2018		92,800			160,000			50,000

At December 31, 2018, Pitino owes Brey $16,000 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	$	(862,000	)		$	(366,000	)
Cost of goods sold		515,000				209,000
Expenses		185,400				67,000
Equity in earnings of Brey		(68,400	)			0
Net income	$	(230,000	)		$	(90,000	)
Retained earnings, 1/1/18	$	(488,000	)		$	(278,000	)
Net income (above)		(230,000	)			(90,000	)
Dividends declared		136,000				27,000
Retained earnings, 12/31/18	$	(582,000	)		$	(341,000	)
Cash and receivables	$	146,000			$	98,000
Inventory		255,000				136,000
Investment in Brey		450,000				0
Land, buildings, and equipment (net)		964,000				328,000
Total assets	$	1,815,000			$	562,000
Liabilities	$	(718,000	)		$	(71,000	)
Common stock		(515,000	)			(150,000	)
Retained earnings, 12/31/18		(582,000	)			(341,000	)
Total liabilities and equities	$	(1,815,000	)		$	(562,000	)

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 $68,400 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 $450,000 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.