The acquisition agreement includes an earnings contingency agreement to be settled in cash; its fair value is $$1,000,000.$

It is determined that Summer has an unreported preacquisition contingency related to a pending lawsuit, consisting of a liability with an estimated present value of $$500,000.$

In$-$process research and development owned by Summer is worth $$2,000,000.$

The fair value of the $25$ percent noncontrolling interest in Summer is $$2,400,000.$

Required

a$.$ Prepare the acquisition entry made by Placer.

b$.$ Prepare the working paper eliminating entries to consolidate the trial balances of Placer and Summer at the date of acquisition.

$3$ Consolidation Eliminating Entries, Date of Acquisition Placer Company acquired a $75$ percent

LO $1$

interest in Summer Company for $$10,000,000$ in cash. The condensed balance sheets immediately prior to the acquisition are below:

$\backslash$table$[[($in thousands$),\backslash$table$[[$Placer$],[$Book value$]],$Summer$],[$Book value,Fair value$],[$Cash and receivables. $.............,$$$10,000,$$$2,000,$$$1,600$