Answer:
A. $211,800
B. $282,400
C. $70,600
D. $ 86,600
Explanation:
A. Calculation for the amount that True pay when it purchased Exacto’s shares
Balance in investment account, December 31, 20x7$259,800
Cumulative earnings since acquisition$110,000
Less Cumulative dividends since acquisition(46,000)
Total$64,000
($110,000-46,000)
×Proportion of stock held by True Corporation 0.75
=Total amount debited to Investment account(48,000)
(64,000*0.75)
Purchase amount on January 1, 20X5$211,800
($259,800-$48,000)
B. Calculation for the fair value of Exacto’s net assets on January 1, 20X5
True Corporation’s Purchase amount$211,800
÷True Corp.’s percentage 0.75
=Fair Value of Exacto Company’s Net Assets$282,400
($211,800÷0.75)
C. Calculation for What amount was assigned to the NCI shareholders on January 1, 20X5
Fair Value of Exacto Company’s Net Asset$282,400
×Exacto Company’s percentagex0.25
=NCI’s portion$70,600
($282,400×0.25)
D. Calculation forWhat amount will be assigned to the NCI shareholders
True Corp’s investment balance$259,800
True Corp’s percentage÷0.75
=Fair Value of Exacto’s Net Assets 20X7 $346,400
×Exacto Company’s percentage 0.25
=NCI’s Portion, December 31, 20X7$ 86,600
($346,400×0.25)
