Using the data in the Option 2 Spreadsheet (linked at the bottom of the page), 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 is less than the acquisition price. Within the worksheet, you are to:

1. Select an accounting method (either cost or equity) and explain why you selected this method
2. Perform the required journal entries
3. Complete the consolidation worksheet
4. Prepare the consolidated balance sheet in good form

Assume that Big Company decides to acquire 80% Little Company for $500,000. 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 all noncash assets have a Fair Value that is 10% greater than Book Value Which accounting method is most appropriate for representing investment of this type? Prepare the journal entries for a 80% Asset Acquisition (using Company Cash) Account Prepare the journal entries for a 80% Acquisition by issuing 10, shares of Big Company Stock Account Investment in Little Common Stock Additional Paid In Capital Allocation of Excess Schedule ttle Company for $500,000. Prepare the appropriate journal entries. most appropriate for representing an ent of this type? Prepare Elimination Entries for Stock Acquisition Account DR CR or a 80% Asset Acquisition (using Big mpany Cash) DR CR or a 80% Acquisition by issuing 10,000 Big Company Stock DR CR of Excess Schedule Big Company Balance Sheet (Consolidated) Assets, Liabilities & Equities Cash AR Inventory Land PP&E (net) Accumulated Depreciation Goodwill Patent Total Assets AP Common Stock ($10 par) Additional Paid In Capital Retained Earnings NCI Total Liabilities & Equity