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 56,570 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: Seguros Book Values Seguros Fair Values Pacifica $ (1,270,000) 889,000 (381,000) $ $ Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash Receivables and inventory Property, plant, and equipment Trademarks Total assets Liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities $ (1,048,000) (381,000) 139,000 (1.290,000) 125,000 647,000 1,590,000 378,000 $ 2,740,000 S (575.000) (400,000) (475,000) (1.290,000 $ (2,740,000) 121,000 135.200 623,500 284,200 121.000 146,000 457,000 227,000 951,000 (237,000) (200,000) (70,000) (444,000) (951,000) (237,000) In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $160,000. Although not yet recorded on its books, Pacifica paid legal fees of $17,300 in connection with the acquisition and $8,000 in stock issue costs. a. Prepare Pacifica's entries to account for the consideration transferred to the former owners of Seguros, the direct combination 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. Complete this question by entering your answers in the tabs below. Reg A Reg B and C Prepare Pacifica's entries to account for the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. (Use a 0.961538 present value factor where applicable. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list 1 Record the acquisition of Seguros Company. > 2 Record the legal fees related to the combination. 3 Record the payment of stock issuance costs. Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as of the acquisition date. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Round your answers to the nearest whole dollar.) Show less PACIFICA, INC. AND SEGUROS CO. Consolidation Worksheet For Year Ending December 31 Consolidation Entries Accounts Pacifica Seguros Debit Credit Consolidated Totals Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash Receivables and inventory Property, plant and equipment Investment in Seguros Research and development asset Goodwill Trademarks Total assets Liabilities Contingent performance obligation Common stock Additional paid-in capital Retained earnings Total liabilities and equities
