Pfizer acquired all of the stock of Pharmacia for 1817 million shares of its $0.05 par value. The stock on April 16, 2003 the fair value of the stock issued was $30.75/share. Merger-related cash costs were $101 million. Pharmacia's stockholders' equity accounts at the date of acquisition totaled $7,236 million, and the fair values of its assets and liabilities differed from reported book values as follows:
Inventory .............................................................. $ 2,939
Long-term investments ................................................... 40
Property, plant and equipment ....................................... (317)
In-process research and development............................... 5,052
Developed technology rights ....................................... 37,066
Long-term debt (undervalued) ....................................... 1,841
Other assets .......................................................... (15,606)
Round all answers to the nearest million.
Required
a. Prepare the journal entry Pfizer made to record the acquisition on its own books, following current U.S. GAAP.
b. Calculate the goodwill purchased in this acquisition.
c. Prepare the consolidation working paper eliminating entries needed to consolidate the balance sheets of Pfizer and Pharmacia on April 16,2003.