Saxton Corporation purchases all of Taylor Company’s assets and liabilities on January 1, 2013, for \($12\) million in cash. At the date of acquisition, Taylor’s reported assets consist of current assets of \($10\) million and plant and equipment of \($50\) million.

It reports current liabilities of \($16\) million and long-term debt of \($40\) million. Investigation reveals that Taylor’s plant and equipment is overvalued by \($1.8\) million and it has an unreported customer database valued at \($500,000.\)

Required

a. Prepare the necessary journal entry on Saxton’s books to record its acquisition of Taylor on January 152013:

b. Assume that Saxton purchases all of Taylor’s voting stock on January 1, 2013, for \($12\) million in cash. Prepare the necessary journal entry on Saxton’s books to record the acquisition.