Assume that Big Company decides to acquire 100 Little Company for $500,000 Prepare the appropriate journal entries 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 Prepare the journal entries for acquiring 100 of the net assets of Little, accounting for it as a merger Account DR CR Which accounting method is most appropriate for representing an investment of this type Prepare the journal entries for a 100 of Little Company, accounting for it using the equity method Account DR CR Prepare the journal entries for a 100 Acquisition by issuing 10,000 shares of Big Company Stock Account DR CR Prepare Elimination Entries for Stock Acquisition Account DR CR Big Company Balance Sheet (Consolidated) Assets, Liabilities Equities Book Value Assume that Big Company decides to acquire 100 Little Company for $500,000 Prepare the appropriate journal entries Big Company Balance Sheet Prepare the journal entries for acquiring 100 of the net assets of Prepare E nation E es for Stock Acquisition Account DR CR Little, accounting for it as a merger Assets, Liabilities Equities Book Value Account DR CR $2,100,000 Cash $10,000 AR $200,000 nventory $40,000 nd PP E $400,000 $150,000 Accumulated Depreciation $0 Patent Total Assets $2,600,000 AP $100,000 $450,000 Common Stock ($10 par) $600,000 Additional Paid In Capital Which accounting method is most appropriate for representing an Big Company Balance Sheet (Consolidated Retained Earnings $1,450,000 investment of this type Assets, Liabilities Equities Book Value $2,600,000 Total Liabilities Equity Little Company Balance Sheet Assets, Liabilities Equities Book Value Cash $35,000 $10,000 AR $65,000 nventory $40,000 Land $400,000 PP E Prepare the journal entries for a 100 of Little Company, $150,000 Accumulated Depreciation accounting for it using the equity method DR CR $0 Patent Account $400,000 Total Assets $100,000 AP $100,000 Common Stock Prepare the journal entries for a 100 Acquisition by issuing $50,000 Additional Paid In Capital 10,000 shares of Big Company Stock Account DR CR $150,000 Retained Earnings Total Liabilities Equity $400,000 Assume that Book Value Fair Value

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Assume that Big Company decides to acquire 100% Little Company for $500,000. Prepare the appropriate journal entries. Big Company Balance Sheet Assets, Liabilities & Equities

Assume that Big Company decides to acquire 100% Little Company for $500,000. Prepare the appropriate journal entries.

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Big Company Balance Sheet

Assets, Liabilities & Equities

Book Value

Cash

$2,100,000

$10,000

Inventory

$200,000

Land

$40,000

PP&E

$400,000

Accumulated Depreciation

-$150,000

Patent

Total Assets

$2,600,000

$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

$10,000

Inventory

$65,000

Land

$40,000

PP&E

$400,000

Accumulated Depreciation

-$150,000

Patent

Total Assets

$400,000

$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

Prepare the journal entries for acquiring 100% of the net assets of Little, accounting for it as a merger.
	Account	DR	CR









Which accounting method is most appropriate for representing an investment of this type?

Prepare the journal entries for a 100% of Little Company, accounting for it using the equity method
				Account	DR	CR


Prepare the journal entries for a 100% Acquisition by issuing 10,000 shares of Big Company Stock
				Account	DR	CR

Prepare Elimination Entries for Stock Acquisition
Account	DR	CR










Big Company Balance Sheet (Consolidated)
Assets, Liabilities & Equities		Book Value

Assume that Big Company decides to acquire 100% Little Company for $500,000. Prepare the appropriate journal entries. Big Company Balance Sheet Prepare the journal entries for acquiring 100% of the net assets of Prepare E nation E es for Stock Acquisition Account DR CR Little, accounting for it as a merger Assets, Liabilities & Equities Book Value Account DR CR $2,100,000 Cash $10,000 AR $200,000 nventory $40,000 nd PP&E $400,000 -$150,000 Accumulated Depreciation $0 Patent Total Assets $2,600,000 AP $100,000 $450,000 Common Stock ($10 par) $600,000 Additional Paid In Capital Which accounting method is most appropriate for representing an Big Company Balance Sheet (Consolidated Retained Earnings $1,450,000 investment of this type? Assets, Liabilities & Equities Book Value $2,600,000 Total Liabilities & Equity Little Company Balance Sheet Assets, Liabilities & Equities Book Value Cash $35,000 $10,000 AR $65,000 nventory $40,000 Land $400,000 PP&E Prepare the journal entries for a 100% of Little Company, $150,000 Accumulated Depreciation accounting for it using the equity method DR CR $0 Patent Account $400,000 Total Assets $100,000 AP $100,000 Common Stock Prepare the journal entries for a 100% Acquisition by issuing $50,000 Additional Paid In Capital 10,000 shares of Big Company Stock Account DR CR $150,000 Retained Earnings Total Liabilities & Equity $400,000 Assume that Book Value Fair Value