In 2013, AB InBev acquired the remainder of the stock of Grupo Modelo that it did not previously own. AB InBev had previously reported its investment in Grupo Modelo using the equity method. All numbers below are in millions. Acquisition cost information is as follows:

The following table summarizes the date-of-acquisition fair and book values of Grupo Modelo’s identifiable net assets acquired, as reported in the footnotes to AB InBev’s 2013 financial statements (credit balances are in parentheses):

Required

a. AB InBev reported this acquisition as a stock acquisition. Prepare the journal entry it made on its own books to record the acquisition of Grupo Modelo.

b. Grupo Modelo reported goodwill on its books at \($796\) million, which is adjusted to a fair value of zero. Explain why this revaluation occurs.

c. Grupo Modelo’s deferred tax liabilities had a fair value that was significantly higher than book value. Explain how the acquisition caused an increase in deferred tax liabilities.

d. Calculate the goodwill recognized for this acquisition.

e. Prepare eliminating entries (E) and (R) to consolidate Grupo Modelo at the date of acquisition.

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Cash consideration paid to Grupo Modelo shareholders, at $9.15/share... $20,103 Fair value of previously held equity investment.. 13,905 Merger-related transactions costs, paid in cash 100