Pushdown Accounting Prevost Company acquires all of the voting stock of Sofia Industries for $50 million in cash, and accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in millions): Prevost Sofia Book Value Book Value Fair Value Dr (Cr) Dr (Cr) Dr (Cr) Current assets $10 $5 $3 Plant and equipment, net 500 120 90 Investment in Sofia SO Liabilities (360) (121) (121) Capital stock (80) (5) Retained earnings (120) (1) Total SO SO Sofia has previously unreported identifiable intangibles with a fair value of $25 million. Sofia elects to use pushdown accounting as of the date of acquisition. Required a. Prepare the entry Sofia makes on its own books at the date of acquisition. Enter answers in millions Description Debit Credit Identifiable intangibles 25 Goodwill Ox Current assets OX Plant and equipment OX Retained earnings 1 Pushdown capital 2x b. Prepare the consolidation eliminating entry or entries necessary to consolidate the balance sheets of Prevost and Sofia at the date of acquisition. Enter answers in millions. Ref. Description Debit Credit (E) Capital stock Pushdown capital 2 X 0 Investment in Sofia 50 Check Pushdown Accounting Prevost Company acquires all of the voting stock of Sofia Industries for $50 million in cash, and accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in millions): Prevost Sofia Book Value Book Value Fair Value Dr (Cr) Dr (Cr) Dr (Cr) Current assets $10 $5 $3 Plant and equipment, net 500 120 90 Investment in Sofia SO Liabilities (360) (121) (121) Capital stock (80) (5) Retained earnings (120) (1) Total SO SO Sofia has previously unreported identifiable intangibles with a fair value of $25 million. Sofia elects to use pushdown accounting as of the date of acquisition. Required a. Prepare the entry Sofia makes on its own books at the date of acquisition. Enter answers in millions Description Debit Credit Identifiable intangibles 25 Goodwill Ox Current assets OX Plant and equipment OX Retained earnings 1 Pushdown capital 2x b. Prepare the consolidation eliminating entry or entries necessary to consolidate the balance sheets of Prevost and Sofia at the date of acquisition. Enter answers in millions. Ref. Description Debit Credit (E) Capital stock Pushdown capital 2 X 0 Investment in Sofia 50 Check