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In: Accounting

Part 2: Problem Solving - Journal Using the data in the Option 1 Spreadsheet (linked at...

Part 2: Problem Solving - Journal 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. 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 Complete all work on the spreadsheet attached to this assignment; it will be your only deliverable.

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

Cash

$500,000

Cash

AR

$10,000

AR

Inventory

$50,000

Inventory

Land

$40,000

Land

PP&E

$400,000

PP&E

Accumulated Depreciation

-$150,000

Accumulated Depreciation

Goodwill

Patent

$0

Patent

Total Assets

$850,000

Total Assets

AP

$110,000

AP

Common Stock

$395,000

Common Stock

Additional Paid In Capital

$300,000

Additional Paid In Capital

Retained Earnings

$45,000

Retained Earnings

Total Liabilities & Equity

$850,000

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

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ekkarill92 answered 11 months ago

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Part 2: Problem Solving - Journal Using the data in the Option 1 Spreadsheet (linked at...

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