Question
On 01/01/2014, Company Big obtained 100% of Company Small's shares by paying $3,000,000 cash and issuing 1,000,000 shares of their own stock with $1 face
On 01/01/2014, Company Big obtained 100% of Company Small's shares by paying $3,000,000 cash and issuing 1,000,000 shares of their own stock with $1 face value per share and $5 market value per share. Right before Transaction, Big and Small's financial statements are as belowOn 01/01/2014, Company Big obtained 100% of Company Small's shares by paying $3,000,000 cash and issuing 1,000,000 shares of their own stock with $1 face value per share and $5 market value per share. Right before Transaction, Big and Small's financial statements are as below
Big | Small | |||||||
BV | POST BV | BV | MKV | Consolidated | ||||
Cash | 5,000,000 | 1,000,000 | 1,000,000 | |||||
Accounts Receivable | 5,000,000 | 8,000,000 | 8,000,000 | |||||
Inventory | 7,000,000 | 4,000,000 | 4,000,000 | |||||
PPE | 10,000,000 | 3,000,000 | 1,000,000 | |||||
Patent | 5,000,000 | 3,000,000 | 7,000,000 | |||||
Investment in Small | ||||||||
Goodwill | ||||||||
Loan | (15,000,000) | (15,000,000) | (15,000,000) | |||||
Common Stock | (1,000,000) | (1,000,000) | ||||||
Additional Paid in Capital | (3,000,000) | (2,000,000) | ||||||
Retained Earnings | (13,000,000) | (1,000,000) | ||||||
What should Big's balance sheet look like right after transaction | ||||||||
What should Small's balance sheet look like right after the transaction | ||||||||
What should the consolidated balance sheet look like right after the transaction. |
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