I needed my journal entries, worksheet and consolidated balance sheet verified. Thanks.

Part I Prepare your written response in the areas below. Use a separate section to address a separate part of the question. 1 2 The equity method is the most appropriate method for representing an investment of this type since Big Company acquired Little Company at 100%. The equity method is used when significant influence is excercised; which means that one company holds 20% or more of another company's stock (Baker, Christensen & Cottrell, 2012). Under this method, the investor recognizes income from the investment as the investee earns the income and this investment is reported as one line in the investee's balance sheet (Baker, Christensen & Cottrell, 2012). Income recognized from the investee is reported as one line also on the investor's income statement and this investment represents the investor's share of the investee's net assets (Baker, Christensen & Cottrell, 2012). This income recognized is the investor's share of the invetee's net income (Baker, Christensen & Cottrell, 2012). Asset acquistion is an investment in Little Company by Big Company in the amount of $200,000 acquired at 100% (Baker, Christensen & Cottrell, 2012). The acquistion of Little Company by Big Company for Cash is a debt of investment in Little Company in the amount of $200,000 and a credit in Cash by Big Company (Baker, Christensen & Cottrell, 2012). Common stock is issued as considered in Little Company by Big Company for 10,000 shares in the amount of $25,000 and additional paid in capital in the amount of $175,000(Baker, Christensen & Cottrell, 2012). Elimination entries are used in consolidated worksheets to adjust the totals of the individual account balances of the separate consolidating companies to reflect the amounts that would appear if all legally separate companies were actually a single company (Baker, Christensen & Cottrell, 2012).Goodwill=$40,000 because of the difference between other net assets and investment made by Big Co. (Baker, Christensen & Cottrell, 2012). Goodwill is represented by the fact that Big Co. is paying more than fair value for Little Co.; therefore, Goodwill is recorded by Big Co. in the amount equal to the difference between acquisition amount and fair value of net assets of Little Co. (Baker, Christensen & Cottrell, 2012). Net Assets=$200,000 because Assets($225,000)Liablities($25,000)=$200,000 (Baker, Christensen & Cottrell, 2012). Assume that Fair Value of all noncash assets are 25% greater than book value. Calculationa are multiplied by 125% for inventory, land, PP&E; except cash (Baker, Christensen & Cottrell, 2012). 3 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. Big Company Balance Sheet Assets, Liabilities & Equities Cash AR Inventory Land PP&E Accumulated Depreciation Book Value $500,000 $10,000 $50,000 $40,000 $400,000 -$150,000 Patent $0 Total Assets $850,000 AP $110,000 Common Stock $395,000 Additional Paid In Capital $300,000 Retained Earnings $45,000 Total Liabilities & Equity $850,000 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 Calculation of fair value of the net assets of Little Company Cash Dr....... $35,000 AR Dr...........$10,000 Inventory (125%)Dr........ $81,250 Land (125%)Dr.....$50,000 PP&E (125%)Dr..... $50,000 Gooodwill Dr..........$3,750 Accum Dep Cr.......................... -$5,000 AP Cr.......................................$25,000 Bank Cr..................................$200,000 (Acquisition of Little Company) Purchase Consideration $200,000 Calculation of Net Assets of Little Co. Cash $35,000 AR $10,000 Inventory (125%) $81,250 Land (125%) $50,000 PP&E (125%) $50,000 Accum Dep -$5,000 Patent $0 Total Assets $221,250 AP $25,000 Total Liabilites&Equity $25,000 Net Assets $196,250 Gooodwill ($200,000-$196,250) $3,750 Journal Entry for Acquisition Investment in Little Company(AssetAcquistion) Cash $200,000 Investment in Little Company Cash(from Big Company) $200,000 Investment in Little Co Common Stock(10,000 shares) Additional Paid in Capital Elimination Common Stock Additional Paid in Capital Retained Earnings Goodwill Cash $200,000 Assume that Fair Value of all noncash assets are 25% greater than book value The consolidation process takes place when two or more companies join together to create a single entity which entails separate financial statements of each company leading to a consolidated statement (Baker, Christensen & Cottrell, 2012). The consolidated worksheet comines all the accounts from both companies (Baker, Christensen & Cottrell, 2012). 4 Reference: Baker, R. E., Christensen, T. E., & Cottrell, D. M. (2012). Essentials of advanced financial accounting. New York, NY: McGraw-Hill/Irwin. 5 $200,000 $200,000 $25,000 $175,000 $25,000.00 $35,000.00 $100,000.00 $40,000.00 $ 200,000.00 Assume that Big Company decides to acquire 100% of Little Company Prepare the Consolidated Balance Sheet in for $200,000. Prepare the consolidated balance sheet and any the area below supporting worksheets. Big Company Worksheet Assets, Liabilities & Equities Cash AR Inventory Land PP&E Accumulated Depreciation Goodwill Patent Total Assets AP Common Stock Additional Paid In Capital Retained Earnings Total Liabilities & Equity Little Company $500,000 $10,000 $50,000 $40,000 $400,000 -150,000 $0 $850,000 $110,000.00 $395,000.00 $300,000.00 $45,000.00 $850,000 Big Company Balance Sheet Assets, Liabilities & Equities $35,000 Cash $10,000 AR $81,250 Inventory $50,000 Land $50,000 PP&E -$5,000 Accumulated Depreciation Goodwill $0 Patent $221,250 Total Assets $25,000 AP $25,000 Common Stock $35,000 Additional Paid In Capital $100,000 Retained Earnings $185,000 Total Liabilities & Equity $535,000 $20,000 $115,000 $80,000 $440,000 -$150,000 $40,000 $0 $1,080,000 $135,000 $420,000 $480,000 $45,000 $1,080,000