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)
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, 2021?
4. What intra-entity gross profit in inventory existed as of December 31, 2021?
5. What amounts make up the $117,090 Equity Earnings of Brey account balance for 2021?
6. What is the net income attributable to the noncontrolling interest for 2021?
7. What amounts make up the $621,675 Investment in Brey account balance as of December 31, 2021?
8. Prepare the 2021 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.
9. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.

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Which of the following best explains why buying a house is more beneficial than renting? a. buying is a personal investment while renting involves giving money to the landlord. b. the monthly payments on a mortgage are generally lower than rent on an apartment. c. it's easier to sell a house than it is to get a landlord to break a rental agreement. d. housing prices can go up and down quickly in comparison to the level of rents.

Sabrina gupta, an investment advisor with a major brokerage firm, was examining wal-mart stores, inc. (wal-mart) stock and its valuation. gupta wondered whether to recommend the stock to any of her new clients or to existing clients who did not currently have wal-mart in their portfolios.her key task was to use an intrinsic value approach to price the shares and to then compare the resulting price with the price at which the stock was traded in the market. gupta wanted to use alternative valuation methods and assumptions to produce intrinsic value estimates for wal-mart stock.she was interested in seeing if the alternative methods would point to a consensus regarding the valuation of the stock and to see if the valuations suggested an investment opportunity given the current market price. methods she contemplated to use were: multi-stage growth modelprice earnings multiplemost valuation methods gupta considered required a common set of inputs: future cash flows to wal-mart investorsgrowth rate of future cash flowsdiscount factor or required rate of return by wal-mart investorsgupta gathered data to determine each of the above.gupta thought that dividends to wal-mart shareholders would adequately capture the cash flows to wal-mart shareholders; she also thought that this approach would simplify her task and she would revisit more complex valuation models if she felt the need.gupta thought that capm would provide her a relatively reliable estimate of the required rate of return. capm based required rate of return can be estimated by using a risk free rate, systematic risk of the firm and equity market risk premium. gupta thought that in a valuation exercise that involve long term cash flows, 10-year government bond yield would be an appropriate risk free rate of return estimate. she checked the 10 year note rate and found out that it was about 3.68%. gupta searched for wal-mart beta in bloomberg. bloomberg estimates betas by regressing the s& p 500 returns on the firm returns over the past two years and arrives at a “raw” beta estimate. bloomberg makes an adjustment in raw beta based on some academic research. gupta is confident that bloomberg adjustment is justified and she uses wal-mart beta estimate of 0.66 in her analysis.while gupta is aware of the importance of emrp assumption, she thinks that bloomberg’s historical estimate of 5.05% is a safe assumption. she is aware of the fact that some studies suggest a larger risk premium of approximately six per cent, while others suggest a much lower forward-looking premium of less than four per cent. she is mindful of the arbitrariness of her assumption, and she takes a note to revisit this issue if her valuations produce unreasonable estimates.anticipated dividend growth (g) is often estimated in a variety of ways.first, observed historical dividend growth can be assumed to continue in a perpetual fashion.second, future dividend growth can be estimated on the basis of recent estimates of analysts.gupta noted that the consensus annual wal-mart dividend for fiscal year 2011 was $1.21, and one respected analyst had estimated the expected constant dividend growth (in perpetuity) at approximately 3%.as the chart suggests, both earnings and dividend growth rates are declining but they seem to be higher than the “respected analyst’s” estimates. gupta decides to use several alternative perpetual growth assumptions to see the impact on price. since gupta decided to use variants of dividend discount model (ddm), she checked the anticipated earnings for 2011. analyst’s estimates suggested $4.10 earnings per share. gupta decided to use 10% growth rate from 2011 to 2012 and assumed a steady decline to 3% in 13 years (until 2024) where the perpetual growth rate of 3% resumes. she also assumed that walmart will increase its dividend payout ratio from 30% to 55% from years 2012 to 2024. you are asked to reproduce gupta’s analysis of multi-stage growth model and double check her valuation by using an earnings multiple. you have all the data you need to conduct the multi stage discounted growth model analysis, but you will need to do some research about the multiples valuation.