On April 16, 2003, Pfizer traded $55,873 million fair value of stock for all of the stock of Pharmacia, in a stock acquisition. Pharmacia's stockholders' equity accounts at the date of acquisition totaled $7,236 million, and the $48,637 million excess of acquisition cost over book value was allocated as follows (in millions):
Inventory$ 2,939
Long-term investments40
Property, plant and equipment(317)
In-process research and development5,052
Developed technology rights37,066
Long-term debt premium(1,841)
Other assets (15,606)
Goodwill21,304
Total$48,637
Pfizer has a December 31 year-end, and Pharmacia's results of operations are included in the 2003 consolidated statements for the 8!^ months following its acquisition. Reporting for the above revaluations during 2003 is as follows:
• Pharmacia's inventory was sold during 2003.
• Long-term investments remain on Pharmacia's books.
• Property, plant and equipment is depreciated over an average life of 20 years, straight-line.
• In-process research and development impairment for 2003 is $716 million.
• Finite-lived developed technology rights are valued at $31,596 million, and are amortized over an average life of 11 years, straight-line.
• Indefinite-lived developed technology rights are valued at $5,470 million, and no impairment loss is reported for 2003.
• Amortization of the long-term debt premium is $12 million.
• Other assets are written off over an average of 10 years, straight-line.
• Goodwill is not impaired during 2003.
Required
a. Assume Pharmacia reports net income of $5,000 million for the period April 16 to December 31, 2003, and pays no dividends. Calculate 2003 Equity in Net Income of Pharmacia, recorded by Pfizer on its separate books using the complete equity method.
b. Prepare the eliminating entries necessary to consolidate Pharmacia's 2003 financial results with Pfizer.