Pilgrim Corporation acquires all of the stock of Sonic Company for $5,000,000 in cash. Sonic's...
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Pilgrim Corporation acquires all of the stock of Sonic Company for $5,000,000 in cash. Sonic's net assets had a book value of $3,000,000 at the date of acquisition. The book values of Sonic's assets and liabilities approximated fair values, except that Sonic reported inventories at $900,000 more than fair value and plant assets at $2,000,000 more than fair value. In addition, Sonic had unrecorded identifiable intangible assets with an estimated fair value of $5,000,000, appropriately capitalized according to GAAP. Consolidation working paper eliminating entry (E) at the date of acquisition includes a credit to Investment in Sonic in the amount of:
| A. | $2,100,000 | |
| B. | $3,000,000 | |
| C. | $5,000,000 | |
| D. | $7,900,000 |
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