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S ta) and (b) 34. On December 31, Pacifica, Inc., acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as

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S ta) and (b) 34. On December 31, Pacifica, Inc., 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 50,000 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 Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these year. 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: Seguros Seguros Fair Values Pacifica Book Values $(1.200,000) Revenues 875,000 Expenses Net income. $ (325,000 Retained earnings, 1/1.... $ (950,000) (325.000) 90,000 Net income. . Retained earnings, 12/31 S(1. 185000) $ 110.000 $85,000 190,000 450,000 160,000 85,000 180,000 600,000 200,000 Cash Receivables and inventory. Property, plant, and equipment Trademarks 750,000 1.400,000 300,000 $ 2,560,000 $ 885.000 Total assets s (500,000) $(180,000) $(180,000) (400,000) (475.000) (1.185,000 (435.000) $2,560,000) $(885,000 (200,000) (70,000) Common stock Additional paid-in capital Retained earnings. . .. Total liabilities and equities.. . Common stock (400,000) (475,000) Additional paid-in capital (70,000) 185,000 (435,000 (1,185.0oo $2560,000 $(885000) In addition, Pacifica assessed a research and development project under way at Seguros to havea fair value of S100,000. Although not yet recorded on its books, Pacifica paid legal fees of $15.000 in connection with the acquisition and $9,000 in stock issue costs. Prepare the following: a. Pacifica's entries to account for the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. (Use a 0.961538 present value factor where applicable.) b. A postacquisition column of accounts for Pacifica. c. A worksheet to produce a consolidated balance sheet as of the acquisition date

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