100 1 points Problem 5-28 (Algo) (LO 5-1, 5-2, 5-3,5-4, 5-5, 5-7) Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $558,000 in cash. The subsidiary's stockholders' equity accounts totaled $542,000, and the noncontrolling interest had a fair value of $62,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $36,000. 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 $88,000 in 2019 and $104,000 in 2020. Brey declared dividends of $31,000 in 2019 and $35,000 in 2020. Brey sells inventory to Pitino as follows: Transfer Price Year 2019 2020 2021 Cost to Brey $ 93,000 153,000 182,000 to Pitino $ 235,000 255,000 280,000 Inventory Remaining at Year-End (at transfer price) $ 49,000 61,500 60,000 At December 31, 2021, Pitino owes Brey $40,000 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 (910,000) $(486,000) Cost of goods sold 539,000 233,000 Expenses 187,800 106,000 Equity in earnings of Brey (126,000) Net income Net income (above) $ (309,200) $(147,000) Retained earnings, 1/1/21 Dividends declared $ (536,000) $(326,000) (309,200) (147,000) 153,000 60,000 Retained earnings, 12/31/21 $ (692,200) $(413,000) Cash and receivables $ 170,000 $ 122,000 Inventory 375,000 Investment in Brey 702, 180 Land, buildings, and equipment (net) 988,000 305,000 0 352,000 Total assets $ 2,235,180 $ 779,000