On December 31, 2014, Pacifica, Inc., acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros included 50,000 newly issued Pacifica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31, 2015. Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money.

Immediately prior to the acquisition, the following data for both firms were available:

In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $100,000. Although not yet recorded on its books, Pacifica paid legal fees of $15,000 in connection with the acquisition and $9,000 in stock issue costs.
Prepare the following:
a. Pacifica’s entries to account for the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. (Use a 0.961538 present value factor where applicable.)
b. A postacquisition column of accounts for Pacifica.
c. A worksheet to produce a consolidated balance sheet as of December 31, 2014.

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Seguros Seguros Pacifica Book Values Fair Values (1200,000) 875,000 $ (325,000) $ (950,000) (325,000) 90,000 $(1,185,000) Revenues .. Expenses Net income Retained earnings, 1/1/14 Net income Dividends declared Retained earnings, 12/31/14 Cash Receivables and inventory Property, plant, and equipment Trademarks $ 110,000 $85,000 85,000 180,000 600,000 200,000 190,000 450,000 160,000 $2,560,000 885,000 750,000 1,400,000 300,000 Total assets Liabilities Common stock Additional paid-in capital Retained earnings.. $ (500,000) $(180,000) $(180,000) (400,000) (200,000) (70,000) (1,185,000) (435,000) $(2,560,000) $(885,000) (475,000) Total liabilities and equities