1. Assume Large Corporation Invested $ 600,000 for Small Corporation and the estimated Fair Market Values of Assets, Liabilities and Equity Accounts are as follows:

Assets	Amount $	Liabilities	Amount $
Account Receivable Inventory LT Marketable Securities PP & E	125,000 50,000 55,000 170,000 400,000	Account Payables Retained Earnings Commons Stock	180,000 120,000 100,000 400,000

Required: (2+3 Marks)

a.Determine the Amount of Goodwill or Bargain Purchase.

b.What is the Journal Entry in the book of Large Corporation?

2.From the following Table pass Basic Elimination Entry under Equity Method in the book of Parent Company: (5 Marks)

	Total Book Value	= Common Stock	+ Additional Paid in Capital	+ Retained Earnings
Beginning Book Value + Net Income Dividend	600 200 (50)	150	550	(100) 200 (50)
Ending Book Value	750	150	550	50

3.Consolidated financial statements present the financial position and results of operations for controlling entity and one or more controlled entities. 'Consolidated Financial Statement has some advantages but at the same time it is not free from limitations.' Elaborate this statement. (5 Marks)

Answer rating: 100% (QA)

ANSWER a To determine the amount of goodwill or bargain purchase we need to compare the fair value of the net identifiable assets acquired Assets Liabilities to the purchase price Fair value of net id... View the full answer