Question
Using the data in the Option 1 Spreadsheet (linked at the bottom of the page), perform the accounting required for the acquisition of Little, Inc.
Using the data in the Option 1 Spreadsheet (linked at the bottom of the page), perform the accounting required for the acquisition of Little, Inc. by Big, Inc. This is a 100% acquisition where the book value of the assets acquired equals the acquisition price. 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 Requirements: Complete all work on the spreadsheet attached to this assignment; it will be your only deliverable. Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions. Submit a single MS Excel file for grading. Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.
| 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 Little, accounting for it as a merger. | Prepare Elimination Entries for Stock Acquisition | |||||||
| Assets, Liabilities & Equities | Book Value | Account | DR | CR | |||||
| Cash | $2,100,000 | Account | DR | CR | |||||
| 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 | Which accounting method is most appropriate for representing an investment of this type? | Big Company Balance Sheet (Consolidated) | ||||||
| Retained Earnings | $1,450,000 | Assets, Liabilities & Equities | Book Value | ||||||
| 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 | Prepare the journal entries for a 100% of Little Company, accounting for it using the equity method | |||||||
| Accumulated Depreciation | -$150,000 | ||||||||
| Patent | $0 | Account | DR | CR | |||||
| Total Assets | $400,000 | ||||||||
| AP | $100,000 | ||||||||
| Common Stock | $100,000 | Prepare the journal entries for a 100% Acquisition by issuing 10,000 shares of Big Company Stock | |||||||
| Additional Paid In Capital | $50,000 | ||||||||
| Retained Earnings | $150,000 | Account | DR | CR | |||||
| Total Liabilities & Equity | $400,000 | ||||||||
| Assume that Book Value = Fair Value | |||||||||
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AWS Security Cookbook Practical Solutions For Managing Security Policies Monitoring Auditing And Compliance With AWS
Authors: Heartin Kanikathottu
1st Edition
1838826254, 978-1838826253
