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Assignment Option #1: Acquisitions with Ownership < 100% and BV = FMV Using the data in the Option 1 Spreadsheet (linked at the bottom of the page), perform the accounting required for the acquisition of Little, Inc. by Big, Inc. This is an 80% acquisition, where the book value of the assets acquired equals the acquisition price. Within the worksheet, you are to: Select an accounting method (either cost or equity) and explain why you selected this method Perform the required journal entries Complete the consolidation worksheet Prepare the consolidated balance sheet in good form Assume that Big Company decides to acquire 80% Little Company for $500,000. Prepare the appropriate journal entries.
Big Company Balance Sheet			Which accounting method is most appropriate for representing an investment of this type?					Prepare Elimination Entries for Stock Acquisition
Assets, Liabilities & Equities	Book Value							Account	DR	CR
Cash	$2,100,000
AR	$10,000
Inventory	$200,000
Land	$40,000
PP&E	$400,000
Accumulated Depreciation	-$150,000
Patent	$0
Total Assets	$2,600,000		Prepare the journal entries for a 80% Asset Acquisition (using Big Company Cash)
AP	$100,000
Common Stock ($10 par)	$450,000		Account		DR	CR
Additional Paid In Capital	$600,000
Retained Earnings	$1,450,000
Total Liabilities & Equity	$2,600,000		Prepare the journal entries for a 80% Acquisition by issuing 10,000 shares of Big Company Stock					Big Company Balance Sheet (Consolidated)
Little Company Balance Sheet								Assets, Liabilities & Equities
Assets, Liabilities & Equities	Book Value		Account		DR	CR		Cash
Cash	$35,000		Investment in Little					AR
AR	$10,000		Common Stock					Inventory
Inventory	$65,000		Additional Paid In Capital					Land
Land	$40,000		Allocation of Excess Schedule					PP&E (net)
PP&E	$400,000							Accumulated Depreciation
Accumulated Depreciation	-$150,000							Goodwill
Patent	$0							Patent
Total Assets	$400,000							Total Assets
AP	$100,000							AP
Common Stock	$100,000							Common Stock ($10 par)
Additional Paid In Capital	$50,000							Additional Paid In Capital
Retained Earnings	$150,000							Retained Earnings
Total Liabilities & Equity	$400,000							NCI
								Total Liabilities & Equity
Assume that Book Value = Fair Value

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