| | Part I | | Part II |
| | Prepare your written response in the areas below. Use a separate section to address a separate part of the question. | | 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 |
| 1 | | | Big Company Balance Sheet | | | | | | Big Company Worksheet | | | | | Big Company Balance Sheet |
| | | | Assets, Liabilities & Equities | Book Value | | | | | Assets, Liabilities & Equities | | | | | Assets, Liabilities & Equities |
| | | | Cash | $500,000 | | | | | Cash | | | | | Cash |
| | | | AR | $10,000 | | | | | AR | | | | | AR |
| | | | Inventory | $50,000 | | | | | Inventory | | | | | Inventory |
| | | | Land | $40,000 | | | | | Land | | | | | Land |
| | | | PP&E | $400,000 | | | | | PP&E | | | | | PP&E |
| | | | Accumulated Depreciation | -$150,000 | | | | | Accumulated Depreciation | | | | | Accumulated Depreciation |
| | | | | | | | | | Goodwill |
| | | | Patent | $0 | | | | | Patent | | | | | Patent |
| | | | Total Assets | $850,000 | | | | | Total Assets | | | | | Total Assets |
| | | | AP | $110,000 | | | | | AP | | | | | AP |
| 2 | | | Common Stock | $395,000 | | | | | Common Stock | | | | | Common Stock |
| | | | Additional Paid In Capital | $300,000 | | | | | Additional Paid In Capital | | | | | Additional Paid In Capital |
| | | | Retained Earnings | $45,000 | | | | | Retained Earnings | | | | | Retained Earnings |
| | | | Total Liabilities & Equity | $850,000 | | | | | Total Liabilities & Equity | | | | | 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 |
| 3 | | | 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 |
| 4 |
| 5 |
gwcthe
template8.xlsx
