Saxton Corporation purchases all of Taylor Company's assets and liabilities on January 1, 2010, for $12 million in cash. At the date of acquisition, Taylor's reported assets consist of current assets of $10 million and plant and equipment of $50 million. It reports current liabilities of $16 million and long-term debt of $40 million. Investigation reveals that Taylor's plant and equipment is undervalued by $1.8 million, it has an unreported customer database valued at $500,000, and unreported indefinite life brand names valued at $1.5 million.
Required
a. Prepare the necessary journal entry on Saxton's books to record its acquisition of Taylor on January 1, 2010.
b. Assume that Saxton purchases all of Taylor's voting stock on January 1,2010, for $12 million in cash. Prepare the necessary journal entry on Saxton's books to record the acquisition.