1.2020. in mber 31, 2021 LO 1,4 Picturesque Corporation acouires the voting stock of Sunset Inc. on January 1, 20 preparing to consolidate the trial balances of Picturesque and Sunset at December 3 (two years after the acquisition), you assemble the following information: Date-of-acquisition information: All amounts are in millions 3. Value of stock issued to Sunset shareholders: $9,900. Direct merger costs: $80 and stock registration fees, $35, all paid in cash. Sunset shareholders' equity: $2,350, consisting of capital stock, $500; retained earnings $1,800; accumulated other comprehensive income, $50. Fair value of earnings contingency agreement to be paid in cash: $100. Fair value of previously unrecorded identifiable intangibles (5-year life): $2,500. There are no revaluations of Sunset's reported net assets. Information for 2020 and 2021: All amounts are in millions Sunset's reported net income for 2020: $800; for 2021: $600. Sunset's reported other comprehensive income for 2020: $7.5 gain; for 2021: $12.5 loss. Sunset declared and paid dividends of $30 each year. Goodwill and identifiable intangibles are not impaired in 2020; goodwill is impaired by $70 in 2021. Required Prepare the 2020 and 2021 journal entries made by Picturesque to record its investment, using the complete equity method. b. Prepare the consolidation eliminating entries made at December 31, 2021. ANS: a. The acquisition entry is as follows: 1.2020. in mber 31, 2021 LO 1,4 Picturesque Corporation acouires the voting stock of Sunset Inc. on January 1, 20 preparing to consolidate the trial balances of Picturesque and Sunset at December 3 (two years after the acquisition), you assemble the following information: Date-of-acquisition information: All amounts are in millions 3. Value of stock issued to Sunset shareholders: $9,900. Direct merger costs: $80 and stock registration fees, $35, all paid in cash. Sunset shareholders' equity: $2,350, consisting of capital stock, $500; retained earnings $1,800; accumulated other comprehensive income, $50. Fair value of earnings contingency agreement to be paid in cash: $100. Fair value of previously unrecorded identifiable intangibles (5-year life): $2,500. There are no revaluations of Sunset's reported net assets. Information for 2020 and 2021: All amounts are in millions Sunset's reported net income for 2020: $800; for 2021: $600. Sunset's reported other comprehensive income for 2020: $7.5 gain; for 2021: $12.5 loss. Sunset declared and paid dividends of $30 each year. Goodwill and identifiable intangibles are not impaired in 2020; goodwill is impaired by $70 in 2021. Required Prepare the 2020 and 2021 journal entries made by Picturesque to record its investment, using the complete equity method. b. Prepare the consolidation eliminating entries made at December 31, 2021. ANS: a. The acquisition entry is as follows
