On December 31,2009, Pacifica, Inc., acquired 100 percent ofthe voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros included 50,000 newly issued Paci¬ fica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31, 2010. Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money.

Immediately prior to the acquisition, the following data for both firms were available:

Seguros Seguros Pacifica Book Values Fair Values Revenues.

, $(1,200,000)

Expenses ...

875,000 Net income..

. $ (325,000)

Retained earnings, 1/1/09..

(950,000)

Net income ...

(325,000)

Dividends paid..

90,000 Retained earnings, 12/31/09 . . .

. $(1,185,000)

Seguros Seguros Pacifica Book Values Fair Values Cash.
110,000 $ 85,000 $ 85,000 Receivables and inventory.
750,000 190,000 180,000 Property, plant, and equipment . .
1,400,000 450,000 600,000 frademarks.
300,000 160,000 200,000 Totalassets.
$ 2,560,000 $ 885,000 Liabilities.
(500,000)
(180,000)
$(180,000)
Commonstock.
(400,000)
(200,000)
Additional paid-in capital.
(475,000)
(70,000)
Retained earnings.
(1,185,000)
(435,000)
Total liabilities and equities ....
$(2,560,000)
$(885,000)
In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $100,000. Pacifica paid legal and accounting fees of $15,000 in connection with the acquisition and $9,000 in stock issue and registration costs.
Using the acquisition method, prepare the following:

a. Pacifica’s entries to account for the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. (Use a 0.961538 present value factor where applicable.)

b. A postacquisition column of accounts for Pacifica.

c. A worksheet to produce a consolidated balance sheet as of December 31, 2009.