Investments in Other Companies (Non-controlling interest, LO 1) On December 31, 2005, Kootuk Inc. (Kootuk) purchased 80% of the common shares of Grimmer Ltd. (Grimmer) for $3,500,000. At the time of the purchase, Kootuk’s management made the following estimates of the fair values of Grimmer’s assets and liabilities:

Required:

a. Calculate the amount of non-controlling interest that Kootuk would report on its December 31, 2005 consolidated balance sheet as a result of its purchase of Grimmer.

b. What amount would be included in the assets and liabilities on the Kootuk’s December 31, 2005 consolidated balance sheet as a result of the purchase of Grimmer?

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Assets Liabilities Book Value of Grimmer's Assets and Liabilities on December 31, 2005 $5,000,000 2,000,000 Fair Value of Grimmer's Assets and Liabilities on December 31, 2005 $6,000,000 2,400,000