Question
Part 2: Problem Solving - Journal perform the accounting required for the acquisition of Little, Inc. by Big, Inc. Within the worksheet, you are to:
Part 2: Problem Solving - Journal
perform the accounting required for the acquisition of Little, Inc. by Big, Inc. Within the worksheet, you are to:
Select an accounting method (either cost or equity) and explain why you selected this method
Perform the required journal entries
Complete the consolidation worksheet
Prepare the consolidated balance sheet in good form
| 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. | Calculation of fair value of the net assets of Little Company | Journal Entry for Acquisition | Assume that Big Company decides to acquire 100% of Little Company for $200,000. Prepare the consolidated balance sheet and any supporting worksheets. | Prepare the Consolidated Balance Sheet in the area below | ||||||||
| Big Company Balance Sheet | Big Company Worksheet | Big Company Balance Sheet | ||||||||||
| Assets, Liabilities & Equities | Book Value | Assets, Liabilities & Equities | Assets, Liabilities & Equities | |||||||||
| Cash | $500,000 | Cash | Cash | |||||||||
| AR | $10,000 | AR | AR | |||||||||
| Inventory | $50,000 | Inventory | Inventory | |||||||||
| Land | $40,000 | Land | Land | |||||||||
| PP&E | $400,000 | PP&E | PP&E | |||||||||
| Accumulated Depreciation | -$150,000 | Accumulated Depreciation | Accumulated Depreciation | |||||||||
| Goodwill | ||||||||||||
| Patent | $0 | Patent | Patent | |||||||||
| Total Assets | $850,000 | Total Assets | Total Assets | |||||||||
| AP | $110,000 | AP | AP | |||||||||
| Common Stock | $395,000 | Common Stock | Common Stock | |||||||||
| Additional Paid In Capital | $300,000 | Additional Paid In Capital | Additional Paid In Capital | |||||||||
| Retained Earnings | $45,000 | Retained Earnings | Retained Earnings | |||||||||
| Total Liabilities & Equity | $850,000 | Total Liabilities & Equity | Total Liabilities & Equity | |||||||||
| 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 | |||||||||||
| Assume that Fair Value of all noncash assets are 25% greater than book value | ||||||||||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting
Authors: Robert Libby, Patricia Libby, Daniel Short
5th Edition
0073208140, 978-0073208145
