Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answer the following question: Following are preacquisition financial balances for BIG Company and SMALL Company as of December 31. Also included are fair values for

image text in transcribed
Answer the following question: Following are preacquisition financial balances for BIG Company and SMALL Company as of December 31. Also included are fair values for SMAI I romnanu arrounte (all amnunte are exnreccent in IIS dollars). On 31/12, BIG acquires 100% of SMALL's outstanding shares by paying $81,000 in cash and issuing 2,250 shares of its own ordinary shares with a fair value of $40 per share. BIG paid legal and accounting fees of $4,500 as well as $1,125 in shares issuance costs. SMALL will retain its incorporation. Required: a) Prepare the journal entries on 31/12 to record: (1) the acquisition of SMALL by BIG and (2) the payment of the combination costs. b) Prepare the acquisition-date Fair Value allocation schedule to calculate the Goodwill on 31/12(if any). (Show your calculations with the appropriate titles). c) Prepare the consolidation journal entries on 31/12

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditors Letter Handbook

Authors: American Bar Association Business Law Section

2nd Edition

161438973X, 978-1614389736

More Books

Students also viewed these Accounting questions