Big Pharmacy Inc. acquired Small Pharmacy Inc. for $15 billion cash on January 1st, 2025. The assets purchased include finite-life intangible assets with a fair value of $9 billion, in process R&D with a fair value of $4 billion, and property with a book value (after accounting for accumulated depreciation) of $2.5 billion. Big Pharmacy also took over a $6.5 billion liability of Small Pharmacy Inc. Record the journal entry for this acquisition.

Big Pharmacy’s scientists took over a project started by Small Pharmacy scientists and used the documented work of Small Pharmacy scientists (i.e., the in-process R&D) to successfully develop a new vaccine. Big Pharmacy’s scientists spent a total of $750 million in cash to conduct this work in 2026. Record the journal entry for this $750 million spending (assume for tractability that all cash was spent on Dec 31st, 2026, for simplicity and all research activity was conducted on the same day itself).

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The acquisition of Small Pharmacy Inc by Big Pharmacy Inc can be recorded as follows Journal Entry a... View the full answer