1. Orion Ltd. acquires all of Scorpio Inc.'s assets and liabilities on January 1, 2028, for $35 million in cash. Scorpio’s reported assets consist of current assets of $18 million and plant and equipment of $90 million. It reports current liabilities of $25 million and long-term debt of $60 million. Investigation reveals that Scorpio’s plant and equipment is undervalued by $5 million and it has an unreported franchise value of $2.5 million.
   • Prepare the necessary journal entry on Orion’s books to record its acquisition of Scorpio on January 1, 2028.
   • Assume that Orion purchases all of Scorpio’s voting stock on January 1, 2028, for $35 million in cash. Prepare the necessary journal entry on Orion’s books to record the acquisition.