Prepare the consolidated balance sheet in good form

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Reference no: EM131765943

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. by Big, Inc. This is an 80% acquisition, where the book value of the assets acquired equals the acquisition price. Within the worksheet, you are to:

Perform the required journal entries

Complete the consolidation worksheet

Prepare the consolidated balance sheet in good form

Assume that Big Company decides to acquire 80% Little Company for $500,000. Prepare the appropriate journal entries.
Big Company Balance Sheet		Which accounting method is most appropriate for representing an investment of this type?			Prepare Elimination Entries for Stock Acquisition
Assets, Liabilities & Equities	Book Value				Account	DR	CR
Cash	$2,100,000
AR	$10,000
Inventory	$200,000
Land	$40,000
PP&E	$400,000
Accumulated Depreciation	-$150,000
Patent	$0
Total Assets	$2,600,000	Prepare the journal entries for a 80% Asset Acquisition (using Big Company Cash)
AP	$100,000
Common Stock ($10 par)	$450,000	Account	DR	CR
Additional Paid In Capital	$600,000
Retained Earnings	$1,450,000
Total Liabilities & Equity	$2,600,000	Prepare the journal entries for a 80% Acquisition by issuing 10,000 shares of Big Company Stock			Big Company Balance Sheet (Consolidated)
Little Company Balance Sheet					Assets, Liabilities & Equities
Assets, Liabilities & Equities	Book Value	Account	DR	CR	Cash
Cash	$35,000	Investment in Little			AR
AR	$10,000	Common Stock			Inventory
Inventory	$65,000	Additional Paid In Capital			Land
Land	$40,000	Allocation of Excess Schedule			PP&E (net)
PP&E	$400,000				Accumulated Depreciation
Accumulated Depreciation	-$150,000				Goodwill
Patent	$0				Patent
Total Assets	$400,000				Total Assets
AP	$100,000				AP
Common Stock	$100,000				Common Stock ($10 par)
Additional Paid In Capital	$50,000				Additional Paid In Capital
Retained Earnings	$150,000				Retained Earnings
Total Liabilities & Equity	$400,000				NCI
					Total Liabilities & Equity

Reference no: EM131765943

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