Consolidated Balance Sheet Working Paper, Bargain Purchase On January 1, 2019, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.7 billion cash. Paxon uses the complete equity method to report its investment. The trial balances of Paxon and Saxon at December 31, 2019, are shown below: (in millions) Cash and receivables Dr(Cr) Paxon Saxon $3,200 $800 2,260 940 Inventory Equity method investments Investment in Saxon Land Buildings and equipment (net) Current liabilities Long-term debt Common stock, par value Additional paid-in capital Retained earnings, January 1 Dividends Sales revenue Equity in net income of Saxon Gain on sale of securities Gain on acquisition Cost of goods sold Depreciation and amortization expense Interest expense Other operating expenses Totals 2,158 650 300 3,600 1,150 (2,020) (1,200) (5,000) (450) (500) (100) (1,200) (350) (2,410) (845) 500 100 (30,000) (10,000) (458) (10) (100) 26,000 300 8,000 40 25 250 2,770 $0 1,600 $0 Several of Saxon's assets had fair values different from their book values at the acquisition date, as follows: (in millions) Fair Value less Book Value Inventory (FIFO) (sold in 2019) $(100) Equity method investments(sold in 2019) (50) Land 245 Buildings and equipment, net (20 years, straight-line) 300 In addition, Saxon had previously unrecorded identifiable intangible assets valued at $110 million, with a 5-year life, straight-line. Required a. Prepare a schedule to compute equity in net income of Saxon for 2019, and the December 31, 2019 balance for Investment in Saxon, as reported on Paxon's books. Instructions: 1. Enter all answers in millions. Round all answers to the nearest million, when appropriate. 2. Use negative signs with answers that reduce equity in net income and the investment account balance. Calculation of Equity in Net Income for 2019 (in millions) Saxon's reported net income for 2019 $ 345 Revaluation write-offs: Inventory (100) X Equity method investments 50 Buildings and equipment (15) Identifiable intangibles (22) Equity in net income of Saxon 258 X $ Calculation of Investment Balance, December 31, 2019 (in millions) Investment balance, January 1, 2019 $ 2,000 x Equity in net income for 2019 Dividends for 2019 (100) Investment balance, December 31, 2019 $ 258 X 2,158