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Accounting Question

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Question;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#51774 | Written in 18-Jul-2015

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