Part 2: Problem Solving - Journal perform the accounting required for the acquisition of...
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Accounting
Part 2: Problem Solving - Journal
perform the accounting required for the acquisition of Little, Inc. by Big, Inc. 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
| Part II | ||||||||||||
| Assume that Big Company decides to acquire 100% of Little Company for $200,000. Prepare the consolidated balance sheet and any supporting worksheets. | Calculation of fair value of the net assets of Little Company | Journal Entry for Acquisition | Assume that Big Company decides to acquire 100% of Little Company for $200,000. Prepare the consolidated balance sheet and any supporting worksheets. | Prepare the Consolidated Balance Sheet in the area below | ||||||||
| Big Company Balance Sheet | Big Company Worksheet | Big Company Balance Sheet | ||||||||||
| Assets, Liabilities & Equities | Book Value | Assets, Liabilities & Equities | Assets, Liabilities & Equities | |||||||||
| Cash | $500,000 | Cash | Cash | |||||||||
| AR | $10,000 | AR | AR | |||||||||
| Inventory | $50,000 | Inventory | Inventory | |||||||||
| Land | $40,000 | Land | Land | |||||||||
| PP&E | $400,000 | PP&E | PP&E | |||||||||
| Accumulated Depreciation | -$150,000 | Accumulated Depreciation | Accumulated Depreciation | |||||||||
| Goodwill | ||||||||||||
| Patent | $0 | Patent | Patent | |||||||||
| Total Assets | $850,000 | Total Assets | Total Assets | |||||||||
| AP | $110,000 | AP | AP | |||||||||
| Common Stock | $395,000 | Common Stock | Common Stock | |||||||||
| Additional Paid In Capital | $300,000 | Additional Paid In Capital | Additional Paid In Capital | |||||||||
| Retained Earnings | $45,000 | Retained Earnings | Retained Earnings | |||||||||
| Total Liabilities & Equity | $850,000 | Total Liabilities & Equity | Total Liabilities & Equity | |||||||||
| Little Company Balance Sheet | ||||||||||||
| Assets, Liabilities & Equities | Book Value | |||||||||||
| Cash | $35,000 | |||||||||||
| AR | $10,000 | |||||||||||
| Inventory | $65,000 | |||||||||||
| Land | $40,000 | |||||||||||
| PP&E | $40,000 | |||||||||||
| Accumulated Depreciation | -$5,000 | |||||||||||
| Patent | $0 | |||||||||||
| Total Assets | $185,000 | |||||||||||
| AP | $25,000 | |||||||||||
| Common Stock | $25,000 | |||||||||||
| Additional Paid In Capital | $35,000 | |||||||||||
| Retained Earnings | $100,000 | |||||||||||
| Total Liabilities & Equity | $185,000 | |||||||||||
| Assume that Fair Value of all noncash assets are 25% greater than book value | ||||||||||||
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