Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part A is done, need help with B and C On December 31, Pacifica, Incorporated, acquired 100 percent of the voting stock of Seguros Company.

image text in transcribedimage text in transcribedimage text in transcribed

Part A is done, need help with B and C

On December 31, Pacifica, Incorporated, 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: 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. Required: a. Prepare Pacifica's journal entries to record the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. b. and 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. Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as of the acquisition date. Note: 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. Input all amounts as positive values. Required: a. Prepare Pacifica's journal entries to record the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. b. and c. Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as 0 the acquisition date. Answer is not complete. Complete this question by entering your answers in the tabs below. Prepare Pacifica's journal entries to record the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. Note: 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Joe Ben Hoyle, C.J. Skender, Joe Hoyle

1st Edition

0982361831, 978-0982361832

More Books

Students also viewed these Accounting questions

Question

How competitive is the external environment of your organization?

Answered: 1 week ago

Question

What other organizations compete on this issue?

Answered: 1 week ago

Question

What significant opposition exists?

Answered: 1 week ago