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?”