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Acquisition and Eliminating Entries Potluck Corp. acquired all of the stock of Sauers Corp. on June 3 0 , 2 0 2 2 , in

Acquisition and Eliminating Entries
Potluck Corp. acquired all of the stock of Sauers Corp. on June 30,2022, in an acquisition reported as a stock acquisition. Sauers trial balance at the date of acquisition, along with the fair values of its assets and liabilities, are:
Book Value Dr (Cr) Fair Value Dr (Cr)
Tangible assets $42,000,000 $17,500,000
Intangible assets 10,500,00063,000,000
Liabilities (39,200,000)(38,500,000)
Capital stock (7,000,000)
Retained earnings (6,230,000)
Accumulated other comprehensive income (70,000)
Total $0
Potluck pays $63 million in cash and issues 1,050,000 shares of stock to the former owners of Sauers. Potlucks stock has a par value of $0.01/share. The market price of the shares at the date of acquisition, $25/share, is used to value the shares issued. Registration fees for the stock are $350,000 and legal and consulting fees connected with the acquisition are $420,000, both paid in cash.
Required
Note: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions.
a. Prepare the journal entry Potluck made to record the stock acquisition on its own books on June 30,2022.
Debit Credit
Investment in Sauers Corp.
63,000,000
0
Answer
Common stock
10,500
0
Answer
Additional Paid-in Capital
0
0
Answer
0
0
Answer
Intangible assets
0
0
Answer
To record the acquisition
b. Prepare working paper eliminating entries (E) and (R) to combine the accounts of Potluck and Sauers at June 30,2022.
Debit Credit
(E)
Capital stock
0
700,000
Answer
Retained earnings
0
0
Answer
0
0
Answer
Additional Paid-in Capital
0
0
Answer
To eliminate Sauer's equity accounts against the investment account
(R)
Tangible assets
0
0
Answer
0
0
Answer
0
0
Answer
Liabilities
0
0
Answer
Intangible assets
0
0
Answer
To revalue Sauer's assets and liabilities to fair value

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