This paper concentrates on the primary theme of ASSUME THAT ON 1/1/01 BIG ACQUIRED 80% OF LITTLE CO FOR $400,000. THE FAIR VALUE OF THE… in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.
- Assume that on 1/1/01 Big acquired 80% of Little Co for $400,000. The fair value of the non-controlling interest on that date was $100,000. Little’s book value on that date was $350,000. All of Little’s assets and liabilities had fair values equal to book value, except:
- Land, undervalued by $40,000
- Inventory (FIFO basis), overvalued by $20,000
- Patents, 5 year remaining life, undervalued by $30,000
- Bonds payable, 10 year remaining life, overvalued by $15,000 (straight-line amortization).
During 2001, Little reported earnings of $60,000, and paid dividends of $20,000.
Prepare all equity method entries for 2001
Prepare all elimination entries for 2001.