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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 transfered to the owner of Seguros included $50,000$ newly issued Pacifica common shares $($$$20$ market values, $$5$ par value$)$ and an agreement to pay an additional $$130,000$ cash if Seguros meets certain proejct completion goals by December $21$ 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 acquistion, the following data for both firms were available:$$

Pacifica Seguros $-$ Book Values Seguros $-$ Fair Values

Revenues $ $(1,200,000)$

Expenses $875,000$

Net Income $ $(325,00)$

Retained earnings, $1/1$ $ $(950,000)$

Net income $(325,000)$

Dividends declared $90,000$

Retained earnings, $12/31$ $ $(1,185,000)$

Cash $$110,000$ $$85,000$ $$85,0000$

Receivables and inventory $750,000190,000180,000$

Property, plant, and equipment $1,400,000450,000600,000$

Trademarks $300,000$ $$160,000200,000$

Total assets $$2,560,000$ $$885,000$

Liabilites $ $(500,000)$ $ $(180,000)$ $ $(180,000)$

Common Stock $(400,000)(200,000)$

Additional paid$-$in capital $(475,000)(70,000)$

Retained earnings $(1,185,000)(435,000)$

Total liabilies and equities $ $(2,560,000)$ $ $(885,000)$

In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $$100,000.$ Although not yet recorded on its books, Pacifica paid legal fees of $$15,000$ in connection with the acquisition and $$9,000$ in stock issue costs.$$

Prepare the following:$$

$*$ Pacifica's journal entries to record the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs. $($Use a $0\mathrm{.}971538$ present value factor where applicable.$)$

$*$ A postacquistion column of account for Pacifica.$$

$*$ A worksheet to produce a consolidated balance sheet as of the acquisition date.

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