On December $31,$ Pacifica, Incorporated, acquired $100$ percent of the voting stock of Seguros Company. Pacifica will maintain Seguros

as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros

included $55,370$ newly issued Pacifica common shares $($ $$20$ market value, $$5$ par value$)$ and an agreement to pay an additional

$$130,000$ cash if Seguros meets certain project completion goals by December $31$ of the following year. Pacifica estimates a $50$

percent probability that Seguros will be successful in meeting these goals and uses a $4$ percent discount rate to represent the time

value of money.

mmediately prior to the acquisition, the following data for both firms were available:

In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $$112,000.$ Although not

yet recorded on its books, Pacifica paid legal fees of $$22,500$ in connection with the acquisition and $$10,400$ in stock issue costs.

Required:

a$.$ Prepare Pacifica's journal entries to record the consideration transferred to the former owners of Seguros, the direct combination

costs, and the stock issue and registration costs.

b$.$ and c$.$ Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as of

the acquisition date.

Complete this question by entering your answers in the tabs below.

ReqA

Req $B$ and $C$

Prepare Pacifica's journal entries to record the consideration transferred to the former owners of Seguros, the direct combination costs,

and the stock issue and registration costs.

Note: Use a $0\mathrm{.}961538$ present value factor where applicable. If no entry is required for a transaction$/$event$,$ select $"$No journal entry

required" in the first account field.

Journal entry worksheet

$2$

$3$

Record the acquisition of Seguros Company.

Note: Enter debits before credits.