Pacifica Company acquires all the voting stock of Southern Industries for $80 million in cash, and accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in millions):
Southern has previously unreported identifiable intangibles with a fair value of $75 million. Southern elects to use pushdown accounting as of the date of acquisition.
Required a. Prepare the entry Southern makes on its own books at the date of acquisition, using pushdown accounting.
b. Prepare the consolidation eliminating entry or entries necessary to consolidate the balance sheets of Pacifica and Southern at the date of acquisition.

Question

Pacifica Company acquires all the voting stock of Southern Industries for $80 million in cash, and accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in millions):
  Southern has previously unreported identifiable intangibles with a fair value of $75 million. Southern elects to use pushdown accounting as of the date of acquisition.
Required a. Prepare the entry Southern makes on its own books at the date of acquisition, using pushdown accounting.
b. Prepare the consolidation eliminating entry or entries necessary to consolidate the balance sheets of Pacifica and Southern at the date of acquisition.

Quizplus · Accepted Answer

The Answer of Pacifica Company acquires all the voting stock of Southern Industries for $80 million in cash, and accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in millions):
  Southern has previously unreported identifiable intangibles with a fair value of $75 million. Southern elects to use pushdown accounting as of the date of acquisition.
Required a. Prepare the entry Southern makes on its own books at the date of acquisition, using pushdown accounting.
b. Prepare the consolidation eliminating entry or entries necessary to consolidate the balance sheets of Pacifica and Southern at the date of acquisition.

Pacifica Company Acquires All the Voting Stock of Southern Industries