P4.5 Consolidated Balance Sheet Working Paper, Bargain Purchase (see related P3.4) On January 1, 2019, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.7 billion cash. Paxon uses the complete cquity method to report its investment. The trial balances of Paxon and Saxon at December 31, 2019, are shown below: Dr (Cr) (in millions) Paxon Saxon $ $ 3,200 2,260 800 940 Cash and receivables............ Inventory...... Equity method investments ... Investment in Saxon......... Land Buildings and equipment, net ... Current liabilities.................................... Long-term debt ............ Common stack, par value ........... Additional paid-in capital.. Retained earnings, January 1.... Dividends Sales revenue... Equity in net income of Saxon ............................. Gain on sale of securities ....... Gain on acquisition. ..... Cost of goods sold. ... Depreciation and amortization expense....... Interest expense. .... Other operating expenses .... Totals 2,158 650 3,600 (2,020) (5,000) (500) (1.200) (2,410) 500 (30,000) (458) 300 1,150 (1.200) (450) (100) (350) (845) 100 (10,000) (10) 8,000 (100) 26,000 300 250 2.770 40 25 1.600 0 Several of Saxon's assets had fair values different from their look values at the acquisition date, as follows: (in millions) Fair value - Book value Inventory (FIFO) (sold in 2019). ... Equity method investments (sold in 2019)... Land... Buildings and equipment, net (20 years, straight-line)........ $(100) (50) 245 300 In addition, Saxon had previously unrecorded identifiable intangible assets valued at $110 million, with a 5-year life, straight-line. Required a. Prepare a schedule to compute equity in net income of Saxon for 2019, and the December 31, 2019 balance for Investment in Saxon, as reported on Paxon's books b. Use a working paper to consolidate the trial balances of Paxon and Saxon at December 31, 2019 C. Prepare the consolidated balance sheet at December 31, 2019, and the consolidated income state- ment for 2019