Dr. Pepper Snapple Group (DPSG) acquired all the stock of Turquoise Water, Inc. The acquisition involved the following payments:
$$\begin{array} { l r }
\text { Cash paid to Turquoise Water } & \$ 85,000,000 \
\text { Cash paid to Morgan Stanley for consulting services } & 12,000,000 \
\text { Stock issued, 100,000 shares, \$0.50 par, fair value at acqui sition } & 5,000,000 \
\text { Stock registration fees, paid in cash } & 600,000 \
\text { Earnings contingency, to be paid in three years, present value } & 2,000,000
\end{array}$$ Here are the balance sheets of DPSG and Turquoise Water just prior to the acquisition. Fair value information on Turquoise Water's assets and liabilities is also provided.
Required a. Prepare the journal entry DPSG made to record the acquisition on its own books.
b. Prepare a working paper to consolidate the balance sheet accounts of DPSG and Turquoise Water at the date of acquisition.
c. Present, in good form, DPSG's consolidated balance sheet at the date of acquisition.

Question

Dr. Pepper Snapple Group (DPSG) acquired all the stock of Turquoise Water, Inc. The acquisition involved the following payments:
 $$\begin{array} { l r } 
\text { Cash paid to Turquoise Water } & \$ 85,000,000 \
\text { Cash paid to Morgan Stanley for consulting services } & 12,000,000 \
\text { Stock issued, 100,000 shares, \$0.50 par, fair value at acqui sition } & 5,000,000 \
\text { Stock registration fees, paid in cash } & 600,000 \
\text { Earnings contingency, to be paid in three years, present value } & 2,000,000
\end{array}$$ Here are the balance sheets of DPSG and Turquoise Water just prior to the acquisition. Fair value information on Turquoise Water's assets and liabilities is also provided.
  Required a. Prepare the journal entry DPSG made to record the acquisition on its own books.
b. Prepare a working paper to consolidate the balance sheet accounts of DPSG and Turquoise Water at the date of acquisition.
c. Present, in good form, DPSG's consolidated balance sheet at the date of acquisition.

Quizplus · Accepted Answer

The Answer of Dr. Pepper Snapple Group (DPSG) acquired all the stock of Turquoise Water, Inc. The acquisition involved the following payments:
 $$\begin{array} { l r } 
\text { Cash paid to Turquoise Water } & \$ 85,000,000 \
\text { Cash paid to Morgan Stanley for consulting services } & 12,000,000 \
\text { Stock issued, 100,000 shares, \$0.50 par, fair value at acqui sition } & 5,000,000 \
\text { Stock registration fees, paid in cash } & 600,000 \
\text { Earnings contingency, to be paid in three years, present value } & 2,000,000
\end{array}$$ Here are the balance sheets of DPSG and Turquoise Water just prior to the acquisition. Fair value information on Turquoise Water's assets and liabilities is also provided.
  Required a. Prepare the journal entry DPSG made to record the acquisition on its own books.
b. Prepare a working paper to consolidate the balance sheet accounts of DPSG and Turquoise Water at the date of acquisition.
c. Present, in good form, DPSG's consolidated balance sheet at the date of acquisition.

Dr Pepper Snapple Group (DPSG) Acquired All the Stock of Turquoise