Parent Company and Consolidated Balances
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 |
True Corporation acquired 75 percent of Exacto’s common stock on January 1, 20X5. On that date, the fair value of Exacto’s net assets was equal to the book value. True uses the equity method in accounting for its ownership in Exacto and reported a balance of $259,800 in its investment account on December 31, 20X7.
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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