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  3. on december 31, pacifica, inc., acquired 100 perce

On December 31, Pacifica, Inc., acquired 100 percent of the voting stock of Seguros Company....

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Accounting

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 56,500 newly issued Pacifica common shares ( $20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31 of the following year. Pacifica estimates a 50-percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money.
Immediately prior to the acquisition, the following data for both firms were available:
\table[[,Pacifica,\table[[Sguros],[Book],[Values]],\table[[Seguros],[Fair],[Values]]],[\table[[Revenues],[Expenses]],\table[[$(2,110,000)
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