On January 1, 2016, Pal Corp buys 100% of the shares of Sal Corp for $10 million. At that date, Sal has book value of $7 million. Its shareholder equity accounts include $5 million of common stock and $2 million of retained earnings. Sal also has various customer contracts worth $3 million, which are not recorded as assets on S's books. S is NOT dissolved. A consolidate balance sheet is being prepared as of the date of acquisition. Which of the following consolidation entries would be appropriate, as of the acquisition date (in millions)? a. Dr. Investment in Sal 10 Cr. Common stock 5 Cr. Retained earnings 2 Cr. Gain on bargain purchase 3 b. Dr. Common stock 3 Dr. Retained earnings 2 Dr. Customer contracts 3 Cr. Investment in Sal 10 c. Dr. Goodwill 10 Cr. Investment in Sal 10 d. Dr. vestment in Sal 10 Cr. Common Stock 5 Cr. Retained earnings 2 Cr. Customer contracts 3 Peat buys 100% of Seat on August 1, 2016. Which is a correct statement regarding the consolidated income statements dated December 31, 2016? a. The statement will only include sales for Peat. b. The statement will include 12 months of sales for each company c. The statement will include only 5 months of sales for each company d. The statement will include 12 months of sales for Peat and 5 for Sat. 12. If a parent company owns 100% of the shares of a subsidiary, parent retained earnings will equal consolidated retained earnings when the parent uses the initial value method of accounting for the subsidiary. (True False.) True False. Under the acquisition method of accounting for acquired businesses, amounts paid to lawyers and accountants as part of the process of acquiring another company are considered expenses, and are NOT considered part of the consideration transferred in the acquisition