Description
Using the data in the Option 1 Spreadsheet, 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:
- 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.
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Explanation & Answer
Attached.
Assume that Big Company decides to acquire 80% Little Company fo
Big Company Balance Sheet
Assets, Liabilities & Equities
Book Value
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
AP
$100,000
Common Stock ($10 par)
$450,000
Additional Paid In Capital
$600,000
Retained Earnings
$1,450,000
Total Liabilities & Equity
$2,600,000
Little Company Balance Sheet
Assets,...