Acquisition and Eliminating EntriesPotluck Corp. acquired all of the stock of Sauers Corp. on June 30, 2022, in an acquisition reported as a stock acquisition. Sauers’ trial balance at the date of acquisition, along with the fair values of its assets and liabilities, are: Potluck pays $99 million in cash and issues 1,650,000 shares of stock to the former owners of Sauers. Potluck’s stock has a par value of $0.01 /share. The market price of the shares at the date of acquisition, $39 /share, is used to value the shares issued. Registration fees for the stock are $550,000 and legal and consulting fees connected with the acquisition are $660,000, both paid in cash.RequiredNote: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions.please avoid solutions in an image format thanku Tangible assetsIntangible assetsLiabilitiesCapital stockRetained earningsAccumulated other comprehensive incomeTotalFair ValueDr (Cr)$66,000,000 $27,500,00016,500,000 99,000,000(61,600,000) (60,500,000)(11,000,000)(9,790,000)(110,000)$0Book Value Dr (Cr) a. Prepare the journal entry Potluck made to record the stock acquisition on its own books on June 30, 2022.CreditCashCommon stockAdditional Paid-in CapitalGoodwillIntangible assetsTo record the acquisitionDebit99,000,00016,50064,499,50063,200,000V 99,000,000(E) Tangible assetsGoodwillIntangible assetsb. Prepare working paper eliminating entries (E) and (R) to combine the accounts of Potluck and Sauers atJune 30, 2022.0 x0x0 x0x0 xTo eliminate Sauer's equity accounts against the investment account(R) GoodwillAdditional Paid-in CapitalTo revalue Sauer's assets and liabilities to fair valueDebit000000O00Credit0x0 x0 x0x0x0x0x0 x0x

The act of one company or person acquiring control or ownership of another company or a sizable…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Acquisition and Eliminating Entries

Potluck Corp. acquired all of the stock of Sauers Corp. on June 30, 2022, in an acquisition reported as a stock acquisition. Sauers’ trial balance at the date of acquisition, along with the fair values of its assets and liabilities, are:

Potluck pays $99 million in cash and issues 1,650,000 shares of stock to the former owners of Sauers. Potluck’s stock has a par value of $0.01 /share. The market price of the shares at the date of acquisition, $39 /share, is used to value the shares issued. Registration fees for the stock are $550,000 and legal and consulting fees connected with the acquisition are $660,000, both paid in cash.

Required

Note: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions.

please avoid solutions in an image format thanku

Tangible assets
Intangible assets
Liabilities
Capital stock
Retained earnings
Accumulated other comprehensive income
Total
Fair Value
Dr (Cr)
$66,000,000 $27,500,000
16,500,000 99,000,000
(61,600,000) (60,500,000)
(11,000,000)
(9,790,000)
(110,000)
$0
Book Value Dr (Cr)

a. Prepare the journal entry Potluck made to record the stock acquisition on its own books on June 30, 2022.
Credit
Cash
Common stock
Additional Paid-in Capital
Goodwill
Intangible assets
To record the acquisition
Debit
99,000,000
16,500
64,499,500
63,200,000
V 99,000,000
(E) Tangible assets
Goodwill
Intangible assets
b. Prepare working paper eliminating entries (E) and (R) to combine the accounts of Potluck and Sauers at
June 30, 2022.
0 x
0x
0 x
0x
0 x
To eliminate Sauer's equity accounts against the investment account
(R) Goodwill
Additional Paid-in Capital
To revalue Sauer's assets and liabilities to fair value
Debit
0
0
0
0
0
0
O
0
0
Credit
0x
0 x
0 x
0x
0x
0x
0x
0 x
0x

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