Consolidated Balance Sheet Working Paper, Bargain Purchase On December 31, 2012, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $2.88 billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below. Balance Sheets (in millions) Assets Cash and receivables Inventory Equity method investments Land Paxon Saxon $4,576 $1,152 2,720 1,440 480 1,040 280 Buildings and equipment, net 3,840 960 Total assets 12.176 4312 Liabilities and Shareholders' Equity Current liabilities 2,400 1,600 Long term debt 3.200 640 Common stock, par value 800 160 Additional paid-in capital 1,920 560 3856 1,352 Retained earnings Total abilities and shareholders' equity $12.176 $4312 Several of Saxon's assets and liabilities had fair values that were different from their book values. Estimates of the fair values of these items follow (in millions) Inventory Equity method investments Estimated Fair Value $1,600 400 Land 672 Buildings and equipment, net Long-term debe 1,440 464 (a) Calculate the gain on acquisition in this bargain purchase. $ 0 million (b) Prepare a working paper to consolidate the balance sheets of Paxon and Saxon at December 31, 2012. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns. Consolidation Working Paper Accounts Taken From Books Eliminations Consolidated Paxon Saxon Balances (in millions) Dr (Cr) Dr (Cr) Debit Credit Dr (Cr) Cash and receivables 05 0 0 Inventory Equity method investments 0 (R) 0 0 0 0 (R) 0 Investment in Saxon 0 0(E) 0 0 (R) Land 0 0 (R) Buildings and equipment, net 0 0 (R) O O 0 0 0 Current liabilities 0 0 Long-term debt 0 0 (R) 0 0 Common stock, par value 0 0 (E) 0 0 Additional paid-in capital 0 0 (E) 0 0 Retained earnings 0 (E) O D Total 05 $ 05 0 $ (c) Present the consolidated balance sheet, in good form, at the date of acquisition. Assets Cash and receivables Inventory Long-term investments Land Paxon Corporation and Subsidiary Consolidated Balance Sheet Buildings and equipment, net Total assets December 31, 2012 (in millions) Liabilities 0 Current liabilities 0 Long-term debt 0 Total liabilities 0 0 Shareholders' equity Common stock, par value Additional paid-in capital Retained earnings Total equity 0 Total liabilities and equity $ 0 0 0 00 0 0 0 Consolidated Balance Sheet Working Paper, Bargain Purchase On December 31, 2012, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $2.88 billion cash. The balance sheets of Pason and Saxon immediately prior to the combination, are shown below: Balance Sheets (in millions) Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment, net Total assets Liabilities and Shareholders' Equity Current liabilities Long term debt Paxon Saxon $4,576 $1,152 2,720 1,440 480 1.040 280 3840 60 12.176 4312 2,400 1600 3.200 640 Common stock, par value 800 160 Additional paid-in capital Retained earnings 1920 560 3856 1.352 Total liabilities and shareholders' equity $12.176 $4312 Several of Saxon's assets and liabilities had fair values that were different from their book values Estimates of the fair values of these items flow Inventory (in millions) Equity method investments Estimated Fair Value $1,600 400 Several of Saxon's assets and liabilities had fair values that were different from their book values. Estimates of the fair values of these nams follow (in millions) Inventory Equity method investments Estimated Fair Value $1,600 400 Land 672 Buildings and equipment, net Long-term debt 1,440 464 (a) Calculate the gain on acquisition in this bargain purchase $0 million (b) Prepare a working paper to consolidate the balance sheets of Paxon and Saxon at December 31, 2012. Remember to use negative signs with your credit balance answers in the De (Cr) columns Consolidation Working Paper Accounts Taken From Books Eliminations Paxon Saxon (in millions) Dr (Cr) Dr (Cr) Cash and receivables 05 Inventory Equity method investments Investment in Saxon 0 Land Buildings and equipment, net 0 Current Rubilities Long-term debt 500 OGO Consolidated Balances Debit Credit Dr (Cr) 0190 BER 000 D 000 MacBook A Colt Darance of Consolidation Working Paper Accounts Taken From Books Paxon Saxon (in millions) Dr (Cr) Dr (Cr) Cash and receivables 0 $ 0 Inventory 0 0 (R) Equity method investments 0 Investment in Saxon 0 Eliminations Consolidated Balances Debit Credit Dr (Cr) $ 0 0 0 0 (R) 0 0 (E) 0 0 (R) Land 0 0 (R) 0 0 Buildings and equipment, net 0 0 (R) 0 0 0 Current liabilities 0 0 Long-term debt 0 0 (R) 0 0 0 Common stock, par value 0 0 (E) 0 0 Additional paid-in capital 0 0 (E) 0 0 0 0 (E) 0 Retained earnings 0 $ 0 $ 0 $ 0 0 Total (c) Present the consolidated balance sheet, in good form, at the date of acquisition. Paxon Corporation and Subsidiary Consolidated Balance Sheet December 31, 2012 (in millions) ahilities (c) Present the consolidated balance sheet, in good form, at the date of acquisition. Assets Cash and receivables Inventory Long-term investments Land Paxon Corporation and Subsidiary Consolidated Balance Sheet Buildings and equipment, net December 31, 2012 (in millions) Liabilities 0 Current liabilities 0 Long-term debt 0 Total liabilities 0 0 Shareholders' equity $ 0 0 0 Total assets Common stock, par value Additional paid-in capital Retained earnings Total equity 0 Total liabilities and equity $ 0 0 0 0 0