Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $486,000 in cash. The subsidiary's stockholders' equity accounts totaled $470,000, and the noncontrolling interest had a fair value of $54,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $45,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own operations of $80,000 in 2019 and $96,000 in 2020. Brey declared dividends of $27,000 in 2019 and $31,000 in 2020. Brey sells inventory to Pitino as follows: Year Cost to Brey Transfer Price to Pitino Inventory Remaining at Year-End (at transfer price) 2019 $ 85,000 $ 195,000 $ 41,000 2020 118,250 215,000 53,000 2021 156,000 240,000 40,000 At December 31, 2021, Pitino owes Brey $32,000 for inventory acquired during the period. The following separate account balances are for these two companies for December 31, 2021, and the year then ended. Note: Parentheses indicate a credit balance. Pitino Brey Sales revenues $ (894,000 ) $ (446,000 ) Cost of goods sold 531,000 225,000 Expenses 187,000 90,000 Equity in earnings of Brey (117,090 ) 0 Net income $ (293,090 ) $ (131,000 ) Retained earnings, 1/1/21 $ (520,000 ) $ (310,000 ) Net income (above) (293,090 ) (131,000 ) Dividends declared 145,000 52,000 Retained earnings, 12/31/21 $ (668,090 ) $ (389,000 ) Cash and receivables $ 162,000 $ 114,000 Inventory 335,000 216,000 Investment in Brey 621,675 0 Land, buildings, and equipment (net) 980,000 344,000 Total assets $ 2,098,675 $ 674,000 Liabilities $ (835,585 ) $ (7,000 ) Common stock (595,000 ) (278,000 ) Retained earnings, 12/31/21 (668,090 ) (389,000 ) Total liabilities and equity $ (2,098,675 ) $ (674,000 ) What was the annual amortization resulting from the acquisition-date fair-value allocations? Were the intra-entity transfers upstream or downstream? What intra-entity gross profit in inventory existed as of January 1, 2021? What intra-entity gross profit in inventory existed as of December 31, 2021? What amounts make up the $117,090 Equity Earnings of Brey account balance for 2021? What is the net income attributable to the noncontrolling interest for 2021? What amounts make up the $621,675 Investment in Brey account balance as of December 31, 2021? Prepare the 2021 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies. Please answer all questions

Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $486,000 in cash. The subsidiary's stockholders' equity accounts totaled $470,000, and the noncontrolling interest had a fair value of $54,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $45,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own operations of $80,000 in 2019 and $96,000 in 2020. Brey declared dividends of $27,000 in 2019 and $31,000 in 2020. Brey sells inventory to Pitino as follows: Year Cost to Brey Transfer Price to Pitino Inventory Remaining at Year-End (at transfer price) 2019 $ 85,000 $ 195,000 $ 41,000 2020 118,250 215,000 53,000 2021 156,000 240,000 40,000 At December 31, 2021, Pitino owes Brey $32,000 for inventory acquired during the period. The following separate account balances are for these two companies for December 31, 2021, and the year then ended. Note: Parentheses indicate a credit balance. Pitino Brey Sales revenues $ (894,000 ) $ (446,000 ) Cost of goods sold 531,000 225,000 Expenses 187,000 90,000 Equity in earnings of Brey (117,090 ) 0 Net income $ (293,090 ) $ (131,000 ) Retained earnings, 1/1/21 $ (520,000 ) $ (310,000 ) Net income (above) (293,090 ) (131,000 ) Dividends declared 145,000 52,000 Retained earnings, 12/31/21 $ (668,090 ) $ (389,000 ) Cash and receivables $ 162,000 $ 114,000 Inventory 335,000 216,000 Investment in Brey 621,675 0 Land, buildings, and equipment (net) 980,000 344,000 Total assets $ 2,098,675 $ 674,000 Liabilities $ (835,585 ) $ (7,000 ) Common stock (595,000 ) (278,000 ) Retained earnings, 12/31/21 (668,090 ) (389,000 ) Total liabilities and equity $ (2,098,675 ) $ (674,000 ) What was the annual amortization resulting from the acquisition-date fair-value allocations? Were the intra-entity transfers upstream or downstream? What intra-entity gross profit in inventory existed as of January 1, 2021? What intra-entity gross profit in inventory existed as of December 31, 2021? What amounts make up the $117,090 Equity Earnings of Brey account balance for 2021? What is the net income attributable to the noncontrolling interest for 2021? What amounts make up the $621,675 Investment in Brey account balance as of December 31, 2021? Prepare the 2021 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies. Please answer all questions

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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Question

Brey reported net income from its own operations of $80,000 in 2019 and $96,000 in 2020. Brey declared dividends of $27,000 in 2019 and $31,000 in 2020.

Brey sells inventory to Pitino as follows:

Year	Cost to Brey	Transfer Price to Pitino	Inventory Remaining at Year-End (at transfer price)
2019	$	85,000		$	195,000	$	41,000
2020		118,250			215,000		53,000
2021		156,000			240,000		40,000

At December 31, 2021, Pitino owes Brey $32,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2021, and the year then ended.

Note: Parentheses indicate a credit balance.

	Pitino	Brey
Sales revenues	$	(894,000	)	$	(446,000	)
Cost of goods sold		531,000			225,000
Expenses		187,000			90,000
Equity in earnings of Brey		(117,090	)		0
Net income	$	(293,090	)	$	(131,000	)
Retained earnings, 1/1/21	$	(520,000	)	$	(310,000	)
Net income (above)		(293,090	)		(131,000	)
Dividends declared		145,000			52,000
Retained earnings, 12/31/21	$	(668,090	)	$	(389,000	)
Cash and receivables	$	162,000		$	114,000
Inventory		335,000			216,000
Investment in Brey		621,675			0
Land, buildings, and equipment (net)		980,000			344,000
Total assets	$	2,098,675		$	674,000
Liabilities	$	(835,585	)	$	(7,000	)
Common stock		(595,000	)		(278,000	)
Retained earnings, 12/31/21		(668,090	)		(389,000	)
Total liabilities and equity	$	(2,098,675	)	$	(674,000	)

What was the annual amortization resulting from the acquisition-date fair-value allocations?
Were the intra-entity transfers upstream or downstream?
What intra-entity gross profit in inventory existed as of January 1, 2021?
What intra-entity gross profit in inventory existed as of December 31, 2021?
What amounts make up the $117,090 Equity Earnings of Brey account balance for 2021?
What is the net income attributable to the noncontrolling interest for 2021?
What amounts make up the $621,675 Investment in Brey account balance as of December 31, 2021?
Prepare the 2021 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.
Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.

Please answer all questions

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