International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2015. Amounts paid are as follows (in millions):

The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC’s assets and liabilities at the date of acquisition are also provided.

The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet FASB ASC Topic 805 requirements for asset recognition:

Required

a. Prepare the journal entry or entries ITI makes to record the acquisition on its own books.

b. Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2015.

Transcribed Image Text:

Cash consideration to the former shareholders of GOC 2,000,000 shares of new $1 par common stock issued Registration fees on new stock issued, paid in cash.. Outside legal and advisory services, paid in cash. Fair value of earnings contingency.. 28352 $50 60