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9. On January 1, year 11 Pathan Corp. purchased 80 % of Samoa Corp.'s $10 par common stock or S975,000. Pathan had no prior equity

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9. On January 1, year 11 Pathan Corp. purchased 80 % of Samoa Corp.'s $10 par common stock or S975,000. Pathan had no prior equity interest in Samoa. The remaining 20% of this stock is held by NCI Co., an unrelated party. On the acquisition date for this business combination, the carrying amount of Samoa's net assets was $1 million. The fair values of the assets acquired and liabilities assumed were the same as their carrying amounts on Samoa's balance sheet except for equipment that has book value in excess of fair value of $100,000 with a remaining economic life of 10 years. The fair value of the noncontrolling interest (NCI) is 20% of the implied fair value of the acquiree's net assets at the acquisition date. (No exceptions to the recognition or measurem ent principles apply.) For the year ended December 31, year 11 Samoa's net loss from its independent operations was $18,750, and Samoa paid cash dividends totaling S125,000. In the December 31 consolidated balance sheet, the NCI is reported at a. S217,000 b. $213,000 c. $243,750 d. $256,750 e. $242,000 Show your work and explanations in detail for each question below. No points will be assigned for answers without work or explanation. Bonus questions based on the information for question 9 and assuming the full equity method 1. How much was the equity income recognized by Pathan Corp during year 11? Show your work with clear and complete explanations. 2. What is the amount of change in the balance of the equity investment account during year 11? Show your work with clear and complete explanations. 3. How much was the amount of Noncontrolling interests (NCI) on Jan. 1, year 11? 4. Considering the operating results of Samoa during year 11, is the amount of dividend paid in year 11 reasonable/feasible? Explain. 3

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