Accounting Question
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)
Determine the Amount of Goodwill or Bargain Purchase.
What is the Journal Entry in the book of Large Corporation?
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 |
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)
