Consolidation Working Paper, Identifiable Intangibles, Goodwill International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions): Cash consideration to the former shareholders of GOC $30. 1,200,000 shares of new $1 par common stock issued Registration fees on new stock issued, paid in cash 36 1.8 Outside legal and advisory services, paid in cash Fair value of eamings contingency 3 1.2 The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. m GOC Balance Sheets (in millions) Current assets Book Value Book Value Fair Value $120 16 $9 Property, plant and equipment, net intangible assets 300 78 42 780 12 18 Total assets $1,200 $96 Current abilities Long-term liabilities $90 $12 $12 720 60 61.8 Common stock, par 12 24 Additional paid-in capital 330 36 Retained earnings 60 (15) Accumulated other comprehensive income 00 1.8 Treasury stock B (12) Total liabilities and equity $1,200 $96 The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet ASC Topic 805 requirements for asset recognition: Advanced technology Customer lists Fair Value $3 15 (a) Prepare the journal entry or entries IT makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal Description Debit Credit Investment in GOC Merger expenses Common stock 0 0 Additional paid-in capital 0 0 Contingent consideration liability 0 0 Cash B (b) Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2010. Enter answers in millions and enter all decimal places. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns. Consolidation Working Paper Accounts Taken From Books Eliminations (in millions) Current assets Property, plant and equipment, net Investment in GOC Intangible assets Advanced technology Customer lists Goodwill Current liabilities Long-term liabilities Common stock, $1 par Additional paid-in capital GOC Dr (Cr) Dr (Cr) Debit Credit 01 O (R) $ 0 0 0 O 01110oooo 0(R 0 (R) 0 (R) 0 (R) 0 0 BB 0(E) 0) Consolidated Balances Dr (Cr) 0 0 (R) D() O (RI 0 0 0 0 08) 0 0 nim 0 (R) Intangible assets Advanced technology Customer lists Goodwill Current liabilities Long-term liabilities 0 (R) 0 o -(R) 0 (R) 0 0 (R) 0 0 0 0 (R) 0 Common stock, $1 par 0 0 (E) 0 Additional paid-in capital 0 0 (E) 0 Retained earnings 0 0 0 (E) 0 Accumulated other comprehensive income 0 0 (E) 0 0 Treasury stock 0 0 0(E) 0 Total: 0 $ 0 $ 05 O $ 0 E