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On December 31, Pacifica, Inc., acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with

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On December 31, Pacifica, Inc., 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 51,695 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 Immediately prior to the acquisition, the following data for both firms were available: Book Values (1,810,000) 1,267,000 $ (543,000) Net income Retained earninga, 1/1 Net incone Dividends declared $(1,031,000) (543,000) 96.000 $(1,478,000) Retained earnings, 12/31 Cash Receivables and inventory Property, plant, and equipment 89,000 446,000 240,000 2,863,000 S 909,000 198,000 134,000 134,000 74,400 598,500 299,000 267,000 2,000,000 398,000 Total assets Liabilities Common stock 5 ,000) $(204.001 $ (204,000) (400,000) (200,000) (475,000) (70,000) (1,478,000)(435,000 $ (2,863,000) (909,000) Retained earnings Total liabilities and equities and development project under way at Seguros to have a fair value of $106,000. Although In addition, Pacifica assessed a research not yet recorded on its books, Pacifica paid legal fees of $15,200 in connection with the acquisition and $11,200 in stock issue costs. a. Prepare Pacifica's entries costs, and the stock issue and registration costs b.&c. Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as of the acquisition date to account for the consideration transferred to the former owners of Seguros, the direct combination Req A Req B and C for the tion transferred to the former owners of Seguros, the direct combination c the stock issue and registration costs. (Use a 0.961538 present value factor where applicable. If no entry is required for a I entry required" in the first account field.) Journal entry worksheet Consolidation Worksheet For Year Ending December 31 Consolidation Entries Pacifica Seguros Credit Consolidated Accounts Debit Totals Revenues Expenses Net income Dividends declared Retained earnings, 12/31 Cash Receivables and inventory plant and equipment Investment in Seguros Research and development asset Trademarks 0 0 01 Liabilities Contingent performance obligation Additional paid-in capital Retained Total liabilities and equities 0 0

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