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Accounting Question

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Using the data in the attached spreadsheet, 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.;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 a 100% Asset Acquisition (using Cash) 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% Asset Acquisition (using Big Company Cash);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;I can send the excel file;2) 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;Assume that all noncash assets have a Fair Value that is 10% greater than Book Value

 

Paper#18431 | Written in 18-Jul-2015

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