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Assume that Big Company decides to acquire 100% Little Company-(Answered)

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Assume that Big Company decides to acquire 100% Little Company for $500,000, prepare the journal entries for a 100% Acquisition by issuing 10,000 shared of Big Company Stock.

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, Liabilities & Equities Book Value
Cash $35,000
AR $10,000
Inventory $65,000
Land $40,000
PP&E $400,000
Accumulated Depreciation -$150,000
Patent $0
Total Assets $400,000
AP $100,000
Common Stock $100,000
Additional Paid In Capital $50,000
Retained Earnings $150,000
Total Liabilities & Equity $400,000

Assume that Book Value = Fair Value

 

Paper#9209596 | Written in 27-Jul-2016

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