In 2013, The Coca-Cola Company acquired the remaining outstanding shares of Fresh Trading Ltd. Coca-Cola had previously reported its investment using the equity method. Assume the following information: Coca-Cola paid \($350\) million in cash for Fresh Trading's remaining shares, and reports the acquisition as a merger. Coca-Cola's equity method investment in Fresh Trading was carried at \($4\) million and had a fair value of \($10\) million when the transaction took place. At the date of the transaction, the fair values of Fresh Trading's identifiable assets were \($250\) million, and the fair values of its liabilities were \($100\) million.

Required

a. Explain why Coca-Cola carried its equity method investment at an amount that was considerably below fair value.

b. Prepare Coca-Cola's journal entry or entries to record its acquisition of the remaining shares of Fresh Trading Ltd., assuming Coca-Cola reports the acquisition as a merger.