A.On January 1, 20X3, PURE Products Corporation issued 12,000 shares of its $10 par value stock to acquire the net assets of Light Steel Company. Underlying book value and fair value information for the balance sheet items of Light Steel at the time of acquisition follow: Parent Company and Consolidated balances: Balance Sheet Item Book Value Fair Value Cash 60,000 60,000 Accounts Receivable 100,000 100,000 Inventory (Lifo Base) 60,000 115,000 Land 50,000 70,000 Building & Equipment 400,000 350,000 Less: Accumulated Depreciation -150,000 Total Assets 520,000 695,000 Accounts Payable 10,000 10,000 Bonds Payable 200,000 180,000 Common Stock ($5 par value) 150,000 Additional Paid in Capital 70,000 Retained Earnings 90,000 Total Liabilities & Equities 520,000 Light Steel shares were selling at $18 and PURE Products shares were selling at $50 just before the merger announcement. Additional cash payments made by PURE Products in completing the acquisition were: Finder’s fee paid to firm that located Light Steel: 10,000 Audit fee for stock issued for PURE Products: 3,000 Stock registration fee for new shares of PURE Products 5,000 Legal fees paid to assist in transfer of net assets 9,000 Cost of SEC registration of PURE Products shares 1,000 Required: Prepare all journal entries to record the business combination on PURE Product’s Books. B. Exacto Company reported the following net income and dividends for the years indicated Year Net Income Dividends 20X5 35,000 12,000 20X6 45,000 20,000 20X7 30,000 14,000 Required a. What amount did True pay when it purchased Exacto’s shares? b. What was the fair value of Exacto’s net assets on January 1, 20X5? c. What amount was assigned to the NCI shareholders on January 1, 20X5? d. What amount will be assigned to the NCI shareholders in the consolidated balance sheet prepared at December 31, 20X7?”
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