Powell Corporation paid $15 million in cash to acquire the assets and liabilities of Sloan Company. Powell also agreed to make an additional cash payment in the future, with an expected present value of $600,000, if certain performance targets are met. Powell paid legal and consulting fees of $300,000 in cash in connection with the merger. A comparison of book and fair values of Sloans reported assets and liabilities follows:

(in thousands)

Book Value Fair Value

Current assets $ 600 $ 450

Property and equipment, net 5,000 2,000

Patents and trademarks 200 1,800

Current liabilities(400) (400)

Long-term debt (3,000) (3,200)

Net assets $2,400 $ 650

Sloan also has previously unreported developed technology, valued at $1.2 million, meeting ASC Topic 805 criteria for capitalization.

Required

a) What is the acquisition cost for this transaction?

b) Prepare the journal entry or entries made by Powell to record the business combination as a merger.