On January Paxon Corporation acquired percent of the outstanding common stock of the Saxon Company for $ billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, follow:
in millions Paxon Saxon
Assets
Cash and receivables $ $
Inventory
Equity method investments
Land
Buildings and equipment, net
Total assets $ $
Liabilities and shareholders' equity
Current liabilitiess $ $
Longterm debt
Common stock, par value
Additional paidin capital
Retained earnings
Total liabilities and shareholders equity $ $
Several of Saxons assets and liabilities had fair values that were different from their book values. Estimates of the fair values of these items follow:
in millions Estimated fair value
Inventory $
Equity method investments
Land
Buildings and equipment, net
In addition, Saxon had previously unrecorded identifiable intangible assets valued at $ million. The estimated fair value of the noncontrolling interest in Saxon is $ million.
a Calculate the gain on acquisition and prepare Paxons entry to record the acquisition.
When appropriate, use negative signs with your revaluation answers left column only
Do not use negative signs with your answers in the right column.
Enter answers in millions.
Acquisition cost Answer
Fair value of noncontrolling interest Answer
Total Answer
Book value of Saxon Answer
Revaluations:
Inventory Answer
Equity method investments Answer
Land Answer
Buildings and equipment, net Answer
Identifiable intangibles Answer
Fair value of identifiable net assets Answer
Gain on acquisition Answer
Paxons acquisition entry in millions:
General Journal
Description Debit Credit
Answer
Answer
Answer
Cash Answer
Answer
Answer
Answer
Answer
b
Prepare a working paper to consolidate the balance sheets of Paxon and Saxon at January
Remember to use negative signs with your credit Cr balance answers in the Dr Cr columns. Enter answers in millions.
Consolidation Working Paper
Accounts Taken From Books Eliminations
in millions Paxon
Dr Cr Saxon
Dr Cr Debit Credit Consolidated Balances
Dr Cr
Cash and receivables Answer
Answer
Answer
Inventory Answer
Answer
Answer
R Answer
Equity investments Answer
R Answer
Answer
Identifiable intangible assets R Answer
Answer
Investment in Saxon Answer
Answer
E
Answer
R
Land Answer
Answer
R Answer
Answer
Buildings and equipment, net Answer
Answer
R Answer
Answer
Current liabilities Answer
Answer
Answer
Longterm debt Answer
Answer
Answer
Common stock, par value Answer
Answer
E Answer
Answer
Additional paidin capital Answer
Answer
E Answer
Answer
Retained earnings Answer
Answer
E Answer
Answer
Noncontrolling interest R Answer
Answer
E Answer
Total Answer
Answer
Answer
Answer
Answer
c Present the consolidated balance sheet, in good form, at the date of acquisition.
Do not use negative signs for any of your answers.
Enter answers in millions.
Consolidated Balance Sheet
January
in millions
Assets
Cash and receivables Answer
Inventory Answer
Current assets Answer
Equity method investments Answer
Land Answer
Buildings and equipment, net Answer
Identifiable intangible assets Answer
Total assets Answer
Liabilities and shareholders equity
Current liabilities Answer
Longterm debt Answer
Total liabilities Answer
Shareholders equity
Paxon stockholders equity:
Common stock Answer
Additional paidin capital Answer
Retained earnings Answer
Total Paxon shareholders equity Answer
Noncontrolling interest Answer
Total shareholders equity Answer
Total liabilities and shareholders equity Answer
Please answer all parts of the question.
