Chapter 2 question 35

ACC 370 Worksheet for Chapter 2 Problem 35 Do not type (hardcode) any numbers onto this spreadsheet unless absolutely necessary. Use links and formulas wherever possible. Enter amounts/formulas in blue-shaded cells only. Consideration for Seguros stock consists of the following: Seguros as IPR&D costs of 100,000 Pacifica stock 50,000 shares Pacifica paid legal fees of 15,000 $20 Fair market value Pacifica paid stock issuance costs of 9,000 $5 Par value Contingent consideration (CC) $130,000 50% Probability of payment A/R & Inventory 4% Discount rate PP&E $62,500 Present value of CC Trademarks R&D costs Purchase price (consideration) Book value of net assets Goodwill Excess purchase price 0 Journal entries on Pacifica's books to record acquisition of Seguros: Note: these three entries are NOT consolidation entries. They are posted to the books of Pacifica and are reflected in the Pacifica column below. Your instructor has already set up formulas in the Pacifica column below to capture these entries. 1 Investment in Seguros Common stock Additional paid-in capital Contingent performance obligation To record acquisition of 100% of Seguros stockA B C D E F G H J K L M 2 Professional services expense Cash To record payment of legal fees pursuant to acquisition of Seguros 3 Additional paid-in capital Cash To record stock issuance costs associated with issuing stock to Seguros Consolidation/elimination journal entries: Note: these two entries should be posted to the Adjustments columns below as we did in class last week. Key them with an 'S' or an 'A'. S Common stock Additional paid-in capital Retained earnings Investment in Seguros -0 To eliminate common stock and investment account for Seguros A Property, plant & equipment (PP&E) 9 Research and development costs 50 Goodwill 0 Trademarks 52 Receivables and inventory 53 Investment in Seguros -0 54 To allocate excess purchase price from Investment account to the related assets 55