Assume that Big Company decides to acquire 100% Little Company for $500,000. Prepare the journal entries. for a 100% Acquisition by issuing 10,000 shares of Big Company Stock.

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