Acquisitions with Ownership

Using the data in theOption 1 Spreadsheet(linked at the bottom of the page), perform the accounting required for the acquisition of Little, Inc. by Big, Inc. This is a less than 100% acquisition, where the book value of the assets acquired equals the acquisition price. Within the worksheet, you are to:

1. Select an accounting method (either cost or equity) and explain why you selected this method
2. Perform the required journal entries
3. Complete the consolidation worksheet
4. Prepare the consolidated balance sheet in good form

Requirements:

Complete all work on the spreadsheet attached to this assignment; it will be your only deliverable.

Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions. Submit a single MS Excel file for grading.

Review the grading rubric, which can be accessed from theCourse Informationpage, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

Assume that Big Company decides to acquire 80% Little Company for $500,000. Big Company Balance Sheet Assets, Liabilities & Equities Book Value 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 AP $100,000 Common Stock ($10 par) $450,000 Additional Paid In Capital $600,000 Retained Earnings $1,450,000 Total Liabilities & Equity $2,600,000 Little Company Balance Sheet Assets, Liabilities & Equities Book Value Cash $35,000 AR $10,000 Inventory $65,000 Land $40,000 PP&E $400,000 Accumulated Depreciation -$150,000 Patent $0 Total Assets $400,000 AP $100,000 Common Stock $100,000 Additional Paid In Capital $50,000 Retained Earnings $150,000 Total Liabilities & Equity $400,000 Assume that Book Value = Fair Value Which accounting method is most appropriate for representing investment of this type? Prepare the journal entries for a 80% Asset Acquisition (using Company Cash) Account Prepare the journal entries for a 80% Acquisition by issuing 10, shares of Big Company Stock Account Investment in Little Common Stock Additional Paid In Capital Allocation of Excess Schedule ttle Company for $500,000. Prepare the appropriate journal entries. most appropriate for representing an ent of this type? Prepare Elimination Entries for Stock Acquisition Account DR CR or a 80% Asset Acquisition (using Big mpany Cash) DR CR or a 80% Acquisition by issuing 10,000 Big Company Stock DR CR of Excess Schedule Big Company Balance Sheet (Consolidated) Assets, Liabilities & Equities Cash AR Inventory Land PP&E (net) Accumulated Depreciation Goodwill Patent Total Assets AP Common Stock ($10 par) Additional Paid In Capital Retained Earnings NCI Total Liabilities & Equity