a.

consideration transferred 320000

Non controlling interest fair value 80000
subsidiary fair value at acquisition date 400000
book value -304000
fair value in excess of book value 96000

Excess fair value assignments Years

building 37000 8 years
patented technology 59000 5 years
totals 0

gross profit on 2017 transfers 87750

(195000-107250)
gross profit percentage 45%

Inventory remaining 2017 transfers 49500

gross profit 45%
unrealised gross profit jan 1 2018 22275

Brey's reported net income 123000

Excess fair value amortization -16425
Realised gross profit 22275
Deferred gross profit -22000
Addjusted subsidiary income 106850
ownership 80%
investment income-brey 85480

NCI -Subsidiary's income(106850*20%) 10685

Investment In brey 320000

Net income of brey
2016 76000
2017 92000
2018 123000
291000
Unrealised gross profit -22000
Realised income 2016-2018 269000
petinos ownership 80% 215200
Exccess amortization
(13025*3 years*80%) -39420
Dividends paid by brey
2016 25000
2017 29000
 2018 31000
85000
petinos ownership 80% -68000
Investment In brey 31/12/2018 427780

Part h)
common stock(brey) 116000
retained earnings 1/1/18(brey) 279725
(reduced by unrealised gorss profit)
investment in brey (80%) 316580
Noncontrolling interest in brey(20%) 79145

Part i)
1)Sales Revenues = $1,116,000 (total less $280,000 intra-entity sales)
2)Cost of Goods Sold = $488,400 (add book values less $280,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $24600] and 2018 unrealized gross profit [add $21,000])
3)Expenses = $304,400 (add book values with $10,600 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $14000 (see f.)
6)Consolidated net income to parent = $309,200 (consolidated revenues less consolidated cost of goods sold, expenses, and th
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $536,000 (parent equity method balance)
8)Dividends Paid = $153,000 (parent balance only)
9)Retained Earnings, 12/31 = $692,200 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $252,000 (total less $40,000 intra-entity balance)
11)Inventory = $659,000 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,365,200 (add book values and include a $25,200 net allocation after 3 years of amortiz
14)Patented Technology = $21,000 (original allocation after 3 years of amortization [$7,000 per year])
15)Total Assets = $2,297,200(add consolidated figures)
16)Liabilities = $891,980 (add book values less $40,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $78,020 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $635,000 (parent balance only)
19)Retained Earnings, 12/31 = $692,200 (see above)
20)Total Liabilities and Stockholders' Equity = $2,297,200 (summation
Annual amortization
4625
11800
16425

gross profit on 2018 transfers 88000

(220000-132000)
gross profit percentage 40%

Inventory remaining 2018 transfers 55000

gross profit 40%
unrealised gross profit dec 31 2018 22000
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $25,200 net allocation after 3 years of amortization)
amortization [$7,000 per year])

ance)
y's book value at beginning of period plus unamortized excess less
net income less 10% of subsidiary dividends).
a.
consideration transferred 558000
Non controlling interest fair value 62000
subsidiary fair value at acquisition date 620000
book value -542000
fair value in excess of book value 78000

Excess fair value assignments Years

building 36000 10 years
patented technology 42000 6 years
totals 0

gross profit on 2017 transfers 102000

(255000-153000)
gross profit percentage 40%

Inventory remaining 2017 transfers 61500

gross profit 40%
unrealised gross profit jan 1 2018 24600

Brey's reported net income 147000

Excess fair value amortization -10600
Realised gross profit 24600
Deferred gross profit -21000
Addjusted subsidiary income 140000
ownership 90%
investment income-brey 126000

NCI -Subsidiary's income(89000*10%) 14000

Investment In brey 558000

Net income of brey
2016 88000
2017 104000
2018 147000
339000
Unrealised gross profit -21000
Realised income 2016-2018 318000
petinos ownership 90% 286200
Exccess amortization
(10600*3 years*90%) -28620
Dividends paid by brey
2016 31000
2017 35000
 2018 60000
126000
petinos ownership 90% -113400
Investment In brey 31/12/2018 702180

Part h)
common stock(brey) 342000
retained earnings 1/1/18(brey) 301400
(reduced by unrealised gorss profit)
investment in brey (90%) 579060
Noncontrolling interest in brey(10%) 64340

Part i)
1)Sales Revenues = $1,116,000 (total less $280,000 intra-entity sales)
2)Cost of Goods Sold = $488,400 (add book values less $280,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $24600] and 2018 unrealized gross profit [add $21,000])
3)Expenses = $304,400 (add book values with $10,600 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $14000 (see f.)
6)Consolidated net income to parent = $309,200 (consolidated revenues less consolidated cost of goods sold, expenses, and th
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $536,000 (parent equity method balance)
8)Dividends Paid = $153,000 (parent balance only)
9)Retained Earnings, 12/31 = $692,200 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $252,000 (total less $40,000 intra-entity balance)
11)Inventory = $659,000 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,365,200 (add book values and include a $25,200 net allocation after 3 years of amortiz
14)Patented Technology = $21,000 (original allocation after 3 years of amortization [$7,000 per year])
15)Total Assets = $2,297,200(add consolidated figures)
16)Liabilities = $891,980 (add book values less $40,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $78,020 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $635,000 (parent balance only)
19)Retained Earnings, 12/31 = $692,200 (see above)
20)Total Liabilities and Stockholders' Equity = $2,297,200 (summation
17)Noncontrolling Interest in Brey, 12/31 = $78,020 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $635,000 (parent balance only)
19)Retained Earnings, 12/31 = $692,200 (see above)
20)Total Liabilities and Stockholders' Equity = $2,297,200 (summation
Annual amortization
3600
7000
10600

gross profit on 2018 transfers 98000

(280000-182000)
gross profit percentage 35%

Inventory remaining 2018 transfers 60000

gross profit 35%
unrealised gross profit dec 31 2018 21000
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $25,200 net allocation after 3 years of amortization)
amortization [$7,000 per year])

ance)
y's book value at beginning of period plus unamortized excess less
net income less 10% of subsidiary dividends).
a.
consideration transferred 486000
Non controlling interest fair value 54000
subsidiary fair value at acquisition date 540000
book value -470000
fair value in excess of book value 70000

Excess fair value assignments Years

building 45000 10 years
patented technology 25000 4 years
totals 0

gross profit on 2017 transfers 96750

(215000-118250)
gross profit percentage 45%

Inventory remaining 2017 transfers 53000

gross profit 45%
unrealised gross profit jan 1 2018 23850

Brey's reported net income 131000

Excess fair value amortization -10750
Realised gross profit 23850
Deferred gross profit -14000
Addjusted subsidiary income 130100
ownership 90%
investment income-brey 117090

NCI -Subsidiary's income(89000*10%) 13010

Investment In brey 486000

Net income of brey
2016 80000
2017 96000
2018 131000
307000
Unrealised gross profit -14000
Realised income 2016-2018 293000
petinos ownership 90% 263700
Exccess amortization
(10750*3 years*90%) -29025
Dividends paid by brey
2016 27000
2017 31000
 2018 52000
110000
petinos ownership 90% -99000
Investment In brey 31/12/2018 621675

Part h)
common stock(brey) 278000
retained earnings 1/1/18(brey) 286150
(reduced by unrealised gorss profit)
investment in brey (90%) 507735
Noncontrolling interest in brey(10%) 56415

Part i)
1)Sales Revenues = $1,100,000 (total less $240,000 intra-entity sales)
2)Cost of Goods Sold = $506,150 (add book values less $240,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $23850] and 2018 unrealized gross profit [add $14,000])
3)Expenses = $287,750 (add book values with $10,750 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $13010 (see f.)
6)Consolidated net income to parent = $293,090 (consolidated revenues less consolidated cost of goods sold, expenses, and th
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $520,000 (parent equity method balance)
8)Dividends Paid = $145,000 (parent balance only)
9)Retained Earnings, 12/31 = $668,090 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $244,000 (total less $32,000 intra-entity balance)
11)Inventory = $537,000 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,355,500 (add book values and include a $31,500 net allocation after 3 years of amortiz
14)Patented Technology = $6,250 (original allocation after 3 years of amortization [$8,750 per year])
15)Total Assets = $2,142,750(add consolidated figures)
16)Liabilities = $810,585 (add book values less $32,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $69,075 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $595,000 (parent balance only)
19)Retained Earnings, 12/31 = $668,090 (see above)
20)Total Liabilities and Stockholders' Equity = $2,142,750 (summation
17)Noncontrolling Interest in Brey, 12/31 = $69,075 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $595,000 (parent balance only)
19)Retained Earnings, 12/31 = $668,090 (see above)
20)Total Liabilities and Stockholders' Equity = $2,142,750 (summation
Annual amortization
4500
6250
10750

gross profit on 2018 transfers 84000

(240000-156000)
gross profit percentage 35%

Inventory remaining 2018 transfers 40000

gross profit 35%
unrealised gross profit dec 31 2018 14000
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $31,500 net allocation after 3 years of amortization)
mortization [$8,750 per year])

ance)
y's book value at beginning of period plus unamortized excess less
net income less 10% of subsidiary dividends).
a.
consideration transferred 387000
Non controlling interest fair value 96750
subsidiary fair value at acquisition date 483750
book value -371000
fair value in excess of book value 112750

Excess fair value assignments Years

building 23000 8 years
patented technology 89750 5 years
totals 0

gross profit on 2017 transfers 72000

(160000-88000)
gross profit percentage 45%

Inventory remaining 2017 transfers 42500

gross profit 45%
unrealised gross profit jan 1 2018 19125

Brey's reported net income 109000

Excess fair value amortization -20825
Realised gross profit 19125
Deferred gross profit -27000
Addjusted subsidiary income 80300
ownership 80%
investment income-brey 64240

NCI -Subsidiary's income(104400*20%) 16060

Investment In brey 387000

Net income of brey
2016 69000
2017 85000
2018 109000
263000
Unrealised gross profit -27000
Realised income 2016-2018 236000
petinos ownership 80% 188800
Exccess amortization
(20825*3 years*80%) -49980
Dividends paid by brey
2016 21500
2017 25500
 2018 24000
71000
petinos ownership 80% -56800
Investment In brey 31/12/2018 469020

Part h)
common stock(brey) 190000
retained earnings 1/1/18(brey) 268875
(reduced by unrealised gorss profit)
investment in brey (80%) 367100
Noncontrolling interest in brey(20%) 91775

Part i)
1)Sales Revenues = $1,078,000 (total less $185,000 intra-entity sales)
2)Cost of Goods Sold = $556,875 (add book values less $185,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $19,125] and 2018 unrealized gross profit [add $27,000])
3)Expenses = $274,725 (add book values with $20,825 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $16,060 (see f.)
6)Consolidated net income to parent = $230,340 (consolidated revenues less consolidated cost of goods sold, expenses, and th
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $498,000 (parent equity method balance)
8)Dividends Paid = $134,000 (parent balance only)
9)Retained Earnings, 12/31 = $594,340 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $233,000 (total less $21,000 intra-entity balance)
11)Inventory = $414,000 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,316,375 (add book values and include a $14,375 net allocation after 3 years of amortiz
14)Patented Technology = $35,900 (original allocation after 3 years of amortization [$17,950 per year])
15)Total Assets = $1,999,275 (add consolidated figures)
16)Liabilities = $747,680 (add book values less $36,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $117,255 ([20% of subsidiary's book value at beginning of period plus unamortized
beginning unrealized gross profit] plus 20% of the subsidiary's realized net income less 20% of subsidiary dividends).
18)Common Stock = $540,000 (parent balance only)
19)Retained Earnings, 12/31 = $594,340 (see above)
20)Total Liabilities and Stockholders' Equity = $1,999,275 (summation
17)Noncontrolling Interest in Brey, 12/31 = $117,255 ([20% of subsidiary's book value at beginning of period plus unamortized
beginning unrealized gross profit] plus 20% of the subsidiary's realized net income less 20% of subsidiary dividends).
18)Common Stock = $540,000 (parent balance only)
19)Retained Earnings, 12/31 = $594,340 (see above)
20)Total Liabilities and Stockholders' Equity = $1,999,275 (summation
Annual amortization
2875
17950
20825

gross profit on 2018 transfers 83250

(185000-101750)
gross profit percentage 45%

Inventory remaining 2018 transfers 60000

gross profit 45%
unrealised gross profit dec 31 2018 27000
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $14,375 net allocation after 3 years of amortization)
amortization [$17,950 per year])

ance)
ry's book value at beginning of period plus unamortized excess less
net income less 20% of subsidiary dividends).
a.
consideration transferred 396000
Non controlling interest fair value 44000
subsidiary fair value at acquisition date 440000
book value -380000
fair value in excess of book value 60000

Excess fair value assignments Years

building 25000 10 years
patented technology 35000 4 years
totals 0

gross profit on 2017 transfers 82500

(165000-82500)
gross profit percentage 50%

Inventory remaining 2017 transfers 43500

gross profit 50%
unrealised gross profit jan 1 2018 21750

Brey's reported net income 111000

Excess fair value amortization -11250
Realised gross profit 21750
Deferred gross profit -32500
Addjusted subsidiary income 89000
ownership 90%
investment income-brey 80100

NCI -Subsidiary's income(89000*10%) 8900

Investment In brey 396000

Net income of brey
2016 70000
2017 86000
2018 111000
267000
Unrealised gross profit -32500
Realised income 2016-2018 234500
petinos ownership 90% 211050
Exccess amortization
(11000*3 years*90%) -30375
Dividends paid by brey
2016 22000
2017 26000
 2018 25000
73000
petinos ownership 90% -65700
Investment In brey 31/12/2018 510975

Part h)
common stock(brey) 198000
retained earnings 1/1/18(brey) 268250
(reduced by unrealised gorss profit)
investment in brey (90%) 419625
Noncontrolling interest in brey(10%) 46625

Part i)
1)Sales Revenues = $1,080,000 (total less $190,000 intra-entity sales)
2)Cost of Goods Sold = $556,750 (add book values less $190,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $21750] and 2018 unrealized gross profit [add $32,500])
3)Expenses = $267,250 (add book values with $11,250 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $8900 (see f.)
6)Consolidated net income to parent = $247100 (consolidated revenues less consolidated cost of goods sold, expenses, and the
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $500,000 (parent equity method balance)
8)Dividends Paid = $135,000 (parent balance only)
9)Retained Earnings, 12/31 = $612,100 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $234,000 (total less $22,000 intra-entity balance)
11)Inventory = $418,500 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,321,500 (add book values and include a $17,500 net allocation after 3 years of amortiz
14)Patented Technology = $8,750 (original allocation after 3 years of amortization [$8,750 per year])
15)Total Assets = $1,982,750(add consolidated figures)
16)Liabilities = $768,875 (add book values less $22,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $56,775 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $545,000 (parent balance only)
19)Retained Earnings, 12/31 = $612,100 (see above)
20)Total Liabilities and Stockholders' Equity = $1,982,750 (summation
17)Noncontrolling Interest in Brey, 12/31 = $56,775 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $545,000 (parent balance only)
19)Retained Earnings, 12/31 = $612,100 (see above)
20)Total Liabilities and Stockholders' Equity = $1,982,750 (summation
Annual amortization
2500
8750
11250

gross profit on 2018 transfers 95000

(190000-95000)
gross profit percentage 50%

Inventory remaining 2018 transfers 65000

gross profit 50%
unrealised gross profit dec 31 2018 32500
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $17,500 net allocation after 3 years of amortization)
mortization [$8,750 per year])

ance)
y's book value at beginning of period plus unamortized excess less
net income less 10% of subsidiary dividends).
a.
consideration transferred 522000
Non controlling interest fair value 58000
subsidiary fair value at acquisition date 580000
book value -506000
fair value in excess of book value 74000

Excess fair value assignments Years

building 28000 10 years
patented technology 46000 4 years
totals 0

gross profit on 2017 transfers 94000

(235000-141000)
gross profit percentage 40%

Inventory remaining 2017 transfers 57000

gross profit 40%
unrealised gross profit jan 1 2018 22800

Brey's reported net income 139000

Excess fair value amortization -14300
Realised gross profit 22800
Deferred gross profit -24000
Addjusted subsidiary income 123500
ownership 80%
investment income-brey 98800

NCI -Subsidiary's income(104400*20%) 24700

Investment In brey 522000

Net income of brey
2016 84000
2017 100000
2018 139000
323000
Unrealised gross profit -24000
Realised income 2016-2018 299000
petinos ownership 80% 239200
Exccess amortization
(14300*3 years*80%) -34320
Dividends paid by brey
2016 29000
2017 33000
 2018 56000
118000
petinos ownership 80% -94400
Investment In brey 31/12/2018 632480

Part h)
common stock(brey) 310000
retained earnings 1/1/18(brey) 295200
(reduced by unrealised gorss profit)
investment in brey (80%) 484160
Noncontrolling interest in brey(20%) 121040

Part i)
1)Sales Revenues = $1,108,000 (total less $260,000 intra-entity sales)
2)Cost of Goods Sold = $505,200 (add book values less $260,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $22,800] and 2018 unrealized gross profit [add $24,000])
3)Expenses = $299,700 (add book values with $14,300 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $24,700 (see f.)
6)Consolidated net income to parent = $278,400 (consolidated revenues less consolidated cost of goods sold, expenses, and th
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $528000 (parent equity method balance)
8)Dividends Paid = $149,000 (parent balance only)
9)Retained Earnings, 12/31 = $657,400 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $248,000 (total less $36,000 intra-entity balance)
11)Inventory = $591,000 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,351,600 (add book values and include a $19,600 net allocation after 3 years of amortiz
14)Patented Technology = $11,500 (original allocation after 3 years of amortization [$11,500 per year])
15)Total Assets = $2,202,100 (add consolidated figures)
16)Liabilities = $865,540 (add book values less $36,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $64,160 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $615,000 (parent balance only)
19)Retained Earnings, 12/31 = $657,400 (see above)
20)Total Liabilities and Stockholders' Equity = $2,202,100 (summation
17)Noncontrolling Interest in Brey, 12/31 = $64,160 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $615,000 (parent balance only)
19)Retained Earnings, 12/31 = $657,400 (see above)
20)Total Liabilities and Stockholders' Equity = $2,202,100 (summation
Annual amortization
2800
11500
14300

gross profit on 2018 transfers 104000

(260000-156000)
gross profit percentage 40%

Inventory remaining 2018 transfers 60000

gross profit 40%
unrealised gross profit dec 31 2018 24000
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $19,600 net allocation after 3 years of amortization)
amortization [$11,500 per year])

ance)
y's book value at beginning of period plus unamortized excess less
net income less 10% of subsidiary dividends).
a.
consideration transferred 441000
Non controlling interest fair value 49000
subsidiary fair value at acquisition date 490000
book value -425000
fair value in excess of book value 65000

Excess fair value assignments Years

building 35000 10 years
patented technology 30000 4 years
totals 0

gross profit on 2017 transfers 76000

(190000-114000)
gross profit percentage 40%

Inventory remaining 2017 transfers 48500

gross profit 40%
unrealised gross profit jan 1 2018 19400

Brey's reported net income 121000

Excess fair value amortization -11000
Realised gross profit 19400
Deferred gross profit -25000
Addjusted subsidiary income 104400
ownership 90%
investment income-brey 93960

NCI -Subsidiary's income(104400*10%) 10440

Investment In brey 441000

Net income of brey
2016 75000
2017 91000
2018 121000
287000
Unrealised gross profit -25000
Realised income 2016-2018 262000
petinos ownership 90% 235800
Exccess amortization
(11000*3 years*90%) -29700
Dividends paid by brey
2016 24500
2017 28500
 2018 30000
83000
petinos ownership 90% -74700
Investment In brey 31/12/2018 572400

Part h)
common stock(brey) 238000
retained earnings 1/1/18(brey) 280600
(reduced by unrealised gorss profit)
investment in brey (90%) 466740
Noncontrolling interest in brey(10%) 51860

Part i)
1)Sales Revenues = $1,090,000 (total less $215,000 intra-entity sales)
2)Cost of Goods Sold = $536,600 (add book values less $215,000 in intra-entity purchases. Also, adjust for 2017 unrealized gros
[subtract $19,400] and 2018 unrealized gross profit [add $25,000])
3)Expenses = $277,500 (add book values with $11,000 amortization for excess fair value allocations)
4)Investment Income—Brey = $0 (intra-entity balance is eliminated to include individual revenue and expense accounts of the
5)Noncontrolling Interest in Subsidiary's Net Income = $10,440 (see f.)
6)Consolidated net income to parent = $265,460 (consolidated revenues less consolidated cost of goods sold, expenses, and th
noncontrolling interest's share of the subsidiary's income)
7)Retained Earnings, 1/1 = $510,000 (parent equity method balance)
8)Dividends Paid = $140,000 (parent balance only)
9)Retained Earnings, 12/31 = $635,460 (consolidated beginning balance plus net income less dividends paid)
10)Cash and Receivables = $239,000 (total less $27,000 intra-entity balance)
11)Inventory = $476,000 (total less ending unrealized gross profit)
12Investment in Brey = $0 (intra-entity balance is eliminated so that the individual assets and liabilities of the subsidiary can be
13)Land, Buildings, and Equipment = $1,338,500 (add book values and include a $24,500 net allocation after 3 years of amortiz
14)Patented Technology = $7,500 (original allocation after 3 years of amortization [$7,500 per year])
15)Total Assets = $2,061,000 (add consolidated figures)
16)Liabilities = $791,940 (add book values less $27,000 intra-entity balance)
17)Noncontrolling Interest in Brey, 12/31 = $63,600 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $570,000 (parent balance only)
19)Retained Earnings, 12/31 = $635,460 (see above)
20)Total Liabilities and Stockholders' Equity = $2,061,000 (summation
17)Noncontrolling Interest in Brey, 12/31 = $63,600 ([10% of subsidiary's book value at beginning of period plus unamortized e
beginning unrealized gross profit] plus 10% of the subsidiary's realized net income less 10% of subsidiary dividends).
18)Common Stock = $570,000 (parent balance only)
19)Retained Earnings, 12/31 = $635,460 (see above)
20)Total Liabilities and Stockholders' Equity = $2,061,000 (summation
Annual amortization
3500
7500
11000

gross profit on 2018 transfers 107500

(215000-107500)
gross profit percentage 50%

Inventory remaining 2018 transfers 50000

gross profit 50%
unrealised gross profit dec 31 2018 25000
ra-entity purchases. Also, adjust for 2017 unrealized gross profit

r excess fair value allocations)

include individual revenue and expense accounts of the subsidiary)

es less consolidated cost of goods sold, expenses, and the

ce plus net income less dividends paid)

lance)

he individual assets and liabilities of the subsidiary can be reported)

include a $24,500 net allocation after 3 years of amortization)
mortization [$7,500 per year])

ance)
y's book value at beginning of period plus unamortized excess less
net income less 10% of subsidiary dividends).