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 s1 par common stock issued 36 Registration fees on new stock issued, paid in cash 1.8 Outside legal and advisory services, paid in cash 3 Fair value of earnings contingency 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. ITI GOC Balance Sheets (In millions) Book Value Book Value Fair Value Current assets $ $12D $6 $9 Property, plant and cquipment, nct 300 78 42 Intangible assets 780 12 18 Total assets $1.200 $96 Current liabilities $90 $12 $12 Long-term liabilities 720 60 Common stock, par 12 2.4 Additional paid in capital 330 Retained earnings 60 (15) Accumulated other comprehensive income 19) Treasury stock 13) 3 Total liabilities and equity $1,200 $95 36 1.8 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: Fair Value 53 Advanced technology Customer lists 15 (a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal Description Debit Credit Investment in GOC 0 0 0 0 D D HIVESICHIC MUU 0 0 Common stock Additional paid-in capital ooooo 0 0 Cash 0 (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 Consolidated ITI GOC Balances (in millions) Dr (Cr) Dr (Cr) Debit Credit Dr (Cr) Current assets 0 $ 0 (R) $ 0 Property, plant and equipment, net 0 (R) Investment in GOC 0 (E) $ 0 $ ooo 0 0 0 0 (R) 0 O (R) 0 0 (R) (R) (R) O O O O 0 0 0 0 0 0 0 0 (R) 0 Intangible assets Advanced technology Customer lists Goodwill Current liabilities Long-term liabilities Common stock, $1 par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total: 0 0 0 0 (E) 0 (E) 0 0 0 0 0 0 (E) 0 0 0 (E) 0 0 0 0 0 (E) 0 oo $ 0 $ 0 $ 0 $ $ 0 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 s1 par common stock issued 36 Registration fees on new stock issued, paid in cash 1.8 Outside legal and advisory services, paid in cash 3 Fair value of earnings contingency 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. ITI GOC Balance Sheets (In millions) Book Value Book Value Fair Value Current assets $ $12D $6 $9 Property, plant and cquipment, nct 300 78 42 Intangible assets 780 12 18 Total assets $1.200 $96 Current liabilities $90 $12 $12 Long-term liabilities 720 60 Common stock, par 12 2.4 Additional paid in capital 330 Retained earnings 60 (15) Accumulated other comprehensive income 19) Treasury stock 13) 3 Total liabilities and equity $1,200 $95 36 1.8 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: Fair Value 53 Advanced technology Customer lists 15 (a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal Description Debit Credit Investment in GOC 0 0 0 0 D D HIVESICHIC MUU 0 0 Common stock Additional paid-in capital ooooo 0 0 Cash 0 (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 Consolidated ITI GOC Balances (in millions) Dr (Cr) Dr (Cr) Debit Credit Dr (Cr) Current assets 0 $ 0 (R) $ 0 Property, plant and equipment, net 0 (R) Investment in GOC 0 (E) $ 0 $ ooo 0 0 0 0 (R) 0 O (R) 0 0 (R) (R) (R) O O O O 0 0 0 0 0 0 0 0 (R) 0 Intangible assets Advanced technology Customer lists Goodwill Current liabilities Long-term liabilities Common stock, $1 par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total: 0 0 0 0 (E) 0 (E) 0 0 0 0 0 0 (E) 0 0 0 (E) 0 0 0 0 0 (E) 0 oo $ 0 $ 0 $ 0 $ $ 0