"Son's" Fair Value 1,010,000 Percent Interest in "Son" 70%Consideration Transferred 707,000 Fair Value of NCI 303,000 "Son's" Book Value 790,000

Excess Fair Value Over Book Value 220,000 Depreciable Life

To Buildings 60,000 20 3,000 To Equipment (20,000) 4 (5,000)To Franchises 40,000 10 4,000 To Goodwill 140,000 Indefinite

Year 25% Markup

2012 120,000 40,000 $ 32,000 $ 8,000 2013 150,000 60,000 $ 48,000 $ 12,000 2014 200,000 90,000 $ 72,000 $ 18,000

House Corporation and Consolidated Subsidiaries

Debit

Sales and other revenues (900,000) (700,000) (300,000) 200,000 Cost of goods sold 551,000 300,000 140,000 $ 18,000 Operating expenses 219,000 270,000 90,000 2,000 Income of "Son" Company (91,000) - - 91,000 Income of "Grandson" Company (28,000) (28,000) - 56,000

Net income $ (249,000) $ (158,000) $ (70,000)Net Income NCI "Son"Net Income NCI "Grandson"Net Income - Parent

Retained earnings, 1/1/14 (820,000) (590,000) (150,000) Parent 11,200 Son 590,000 Grandson 150,000 Net income (above) (249,000) (158,000) (70,000)Dividends paid 100,000 96,000 50,000 Parent Son GrandsonRetained earnings, 12/31/14 $ (969,000) $ (652,000) $ (170,000)

Cash and receivables 220,000 334,000 67,000 Inventory 390,200 320,000 103,000 Investment in "Son" Company 807,800 - - $ 67,200

Depreciation Per Year

Intra-EntityPurchases

Retained Intra-Entity Inventory

OriginalCost

Parent Corporation

Son Corporation

Grandson Corporation

Investment in "Grandson" Company 128,000 128,000 - 40,000

Buildings 385,000 320,000 144,000 54,000 Equipment 310,000 130,000 88,000 5,000 Land 180,000 300,000 16,000 Franchise Contracts 32,000 Goodwill 140,000

Total assets $ 2,421,000 $ 1,532,000 $ 418,000

Liabilities (632,000) (570,000) (98,000) Noncontrolling Interest Son

Noncontrolling Interest GrandsonNoncontrolling Interest in SubsCommon stock (820,000) (310,000) (150,000) 460,000 Retained earnings, 12/31/14 (969,000) (652,000) (170,000)

Total liabilities and equities $ (2,421,000) $ (1,532,000) $ (418,000) 1,916,400

FMV Grandson $ 300,000 % Interest 80%

$ 240,000 % NCI 20%NCI Grandson $ 60,000

No. of Years 2

Resold in 2013Resold in 2014 *G transaction Resold in 2015

House Corporation and Consolidated Subsidiaries

Credit Consolidated

(1,700,000) $ 212,000 797,000

581,000 - -

(322,000) (45,000.0) 45,000.0 (14,000.0) 14,000.0

(263,000)

(808,800)

(263,000)

100,000 67,200 $ 28,800 40,000 $ 10,000

$ (971,800)

621,000 $ 18,000 795,200 $ 621,600 -

InvestmentIn Grandson

Non-ControllingInterest

$ 91,000.0 $ 11,200.0 $ 151,200 $ 240,000 - $ 56,000 3,000 900,000 10,000 523,000

496,000 4,000 28,000

140,000

3,503,200

(1,300,000) $ 64,800 $ 266,400 $ (331,200) $ - $ 60,000 $ (60,000) $ -

$ (411,400) (820,000) $ (971,800)

1,916,400 (411,400) (3,503,200)