Pfizer acquires all of Wyeth's 1,400 million shares for $30/share in cash plus 1,400 million shares of Pfizer stock, $0.05/share par value, valued at $15/share. Registration fees for issuing the new Pfizer shares are $200 million, and outside consulting fees are $130 million. Both fees are paid in cash. The book values of Wyeth's assets and liabilities approximate fair value, except for the following:
•Plant assets are overvalued by $3,000 million
•Unreported license agreements are valued at $5,000 million
•Unreported brand names are valued at $20,000 million
Wyeth's equity is reported as follows at the date of acquisition (in millions):
$$\begin{array} { l r }
& \text { Dr (Cr) } \
\hline \text { Common stock, parvalue } & \$(380 ) \
\text { Additio nal paid-in capital } & { [ 7,100 \} } \
\text { Ret ained earnings } & \{ 10,500 \} \
\text { Accumul ated other comprehensive income } & \{ 230 \} \
\text { Treasury stock } & 10
\end{array}$$ Required a. Prepare the entry Pfizer makes on its own books to record the acquisition.
b. Prepare eliminating entries (E) and (R) to consolidate the balance sheet accounts of Pfizer and Wyeth at the date of acquisition.

Question

Pfizer acquires all of Wyeth's 1,400 million shares for $30/share in cash plus 1,400 million shares of Pfizer stock, $0.05/share par value, valued at $15/share. Registration fees for issuing the new Pfizer shares are $200 million, and outside consulting fees are $130 million. Both fees are paid in cash. The book values of Wyeth's assets and liabilities approximate fair value, except for the following:
•Plant assets are overvalued by $3,000 million
•Unreported license agreements are valued at $5,000 million
•Unreported brand names are valued at $20,000 million
Wyeth's equity is reported as follows at the date of acquisition (in millions):
 $$\begin{array} { l r } 
& \text { Dr (Cr) } \
\hline \text { Common stock, parvalue } & \$(380 ) \
\text { Additio nal paid-in capital } & { [ 7,100 \} } \
\text { Ret ained earnings } & \{ 10,500 \} \
\text { Accumul ated other comprehensive income } & \{ 230 \} \
\text { Treasury stock } & 10
\end{array}$$ Required a. Prepare the entry Pfizer makes on its own books to record the acquisition.
b. Prepare eliminating entries (E) and (R) to consolidate the balance sheet accounts of Pfizer and Wyeth at the date of acquisition.

Quizplus · Accepted Answer

The Answer of Pfizer acquires all of Wyeth's 1,400 million shares for $30/share in cash plus 1,400 million shares of Pfizer stock, $0.05/share par value, valued at $15/share. Registration fees for issuing the new Pfizer shares are $200 million, and outside consulting fees are $130 million. Both fees are paid in cash. The book values of Wyeth's assets and liabilities approximate fair value, except for the following:
•Plant assets are overvalued by $3,000 million
•Unreported license agreements are valued at $5,000 million
•Unreported brand names are valued at $20,000 million
Wyeth's equity is reported as follows at the date of acquisition (in millions):
 $$\begin{array} { l r } 
& \text { Dr (Cr) } \
\hline \text { Common stock, parvalue } & \$(380 ) \
\text { Additio nal paid-in capital } & { [ 7,100 \} } \
\text { Ret ained earnings } & \{ 10,500 \} \
\text { Accumul ated other comprehensive income } & \{ 230 \} \
\text { Treasury stock } & 10
\end{array}$$ Required a. Prepare the entry Pfizer makes on its own books to record the acquisition.
b. Prepare eliminating entries (E) and (R) to consolidate the balance sheet accounts of Pfizer and Wyeth at the date of acquisition.

Pfizer Acquires All of Wyeth's 1,400 Million Shares for $30/share