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Acquisition Entry and Consolidation Working Paper Phoenix, Inc acquired all of the outstanding common stock of Spark Corporation for $950 million cash plus 30 million shares of Phoenixs common stock having a market value of $25 per share. Registration fees were $5 million and merger-related consultant and legal fees were $8 million, paid in cash. Immediately prior to the acquisition, the trial balances of the two companies were as follows: Dr (CT) (in millions Phoenix Spark Current assets $2,000 $200 Plant and equipment, net 11.900 700 Current liabilities (500) (150) Long term liabilities (8,000) (300 Common stock, 51 (300) (100) Additional paid in capital (4,000 (50 Retained earnings 11,100) (300) Totals 50 $0 A review of the fair values of Spark's assets indicates that current assets are overvalued by 540 million, plant and equipment is overvalued by $250 million and previously unreported brand names and trademarks have a fair value of $200 million Investment in Spark 1,700 8 0 Merger expenses 0 963 Cash 0 30 Common stock 0 715 Additional paid-in capital b. Prepare a working paper to consolidate the balance sheets of Phoenix and Spark at the date of acquisition Use negative signs with your credit (Cr) answers in the Dr(Cr) columns (not in the Eliminations Credit column). Consolidation Working Paper Accounts Taken From Books Eliminations Consolidated Phoenix Spark Credit Dr(Cr) (in millions) Balances Dr(Cr) Debit Dr(Cr) 1,037 40(R) $ $200 Current assets 1,197 11,900 250 (R) 700 Plant and equipment, net 12,350 07 Investment in Spark 1,200 X (E) 1,700 900 X (R) 07 Brand names and trademarks 0 (R) 2007 200 0 Goodwill 0 (R) 0 X OX 0 x Current liabilities OX (150) OX (300) Long-term liabilities Common stock, $1 par OX (100) (E) 0 x OX Additional paid-in capital OX (50) (E) 0 X OX Retained earnings OX (300) (E) OX 0 x Total $ 0$ 0 $ OX$ OX $ 0 $ OX