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Acquisition and Eliminating Entries, Acquisition Expenses

Pinnacle Corporation acquired all of Stengl Corporation's common stock by issuing 300,000 shares of $1 par common stock with a current market value of $6,000,000. Related accountants' and attorneys' fees were $180,000, paid in cash. The total book value of Stengl's shareholders' equity consists of capital stock of $120,000 and retained earnings of $1,080,000. Book values and fair values of Stengl's assets and liabilities are given below:

	Book Value	Fair Value
Cash and receivables	$480,000	$480,000
Inventories	660,000	540,000
Plant assets, net	960,000	600,000
Current liabilities	(600,000)	(600,000)
Long-term debt	(300,000)	(285,000)
Totals	$1,200,000	$735,000

In addition, Stengl has previously unrecorded identifiable intangible assets with a fair value of $720,000 that meet ASC 805 criteria for recognition.

Required

(a) Prepare the entry Pinnacle makes to record the acquisition on its own books.

Enter numerical answers using all zeros (do not abbreviate to thousands or millions).

General Journal
Description	Debit	Credit
Investment in Stengl	Answer	Answer
Select Answer	Answer	Answer
Common stock	Answer	Answer
Additional paid-in capital	Answer	Answer
Select Answer	Answer	Answer

(b) Prepare the working paper eliminating entries to consolidate the balance sheets of Pinnacle Corporation and Stengl Corporation at the date of acquisition.

Enter numerical answers using all zeros (do not abbreviate to thousands or millions).

ConsolidationJournal
Description	Debit	Credit
(E)
Capital stock	Answer	Answer
Select Answer	Answer	Answer
Select Answer	Answer	Answer
(R)
Long-term debt	Answer	Answer
Identifiable intangible assets	Answer	Answer
Select Answer	Answer	Answer
Plant assets, net	Answer	Answer
Inventories	Answer	Answer
Select Answer	Answer	Answer

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