Advanced Accounting Homework

Here is the description for the assignment. It is comprised of two parts.

Assignment Choice #1: Consolidated Financial Statements Scenario

The first part is a scenario covering the topic of consolidated financial statements. The second part is the preparation of a consolidated financial statement. You will submit both parts separately.

Part 1: Scenario - Written

A new employee has been given responsibility for preparing the consolidated financial statements of Sample Company. After attempting to work alone for some time, the employee seeks assistance in gaining a better overall understanding of the way in which the consolidation process works. You have been asked to provide assistance in explaining the consolidation process. The employee is asking you to respond to the following questions. Please provide full explanations and use examples to support your work.

1. Why must the eliminating entries be entered in the consolidation worksheet each time consolidated statements are prepared?

2. How is the beginning-of-period noncontrolling interest balance determined?

3. How is the end-of-period noncontrolling interest balance determined? Provide an example.

4. Which of the subsidiary’s account balances must always be eliminated? Why?

5. Which of the parent company’s account balances must always be eliminated? Why?

Your responses should be complete, cite appropriate examples, well written, and in conformity with theCSU-Global Guide to Writing and APA Requirements.

Part 2: Problem Solving - Journal

Using the data in the Option 1 Spreadsheet (linked at the bottom of the page), perform the accounting required for the acquisition of Little, Inc. by Big, Inc. 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, income statement, and statement of equity in good form

Complete all work on the spreadsheet attached to this assignment; it will be your only deliverable.

Make sure to label your answers and provide support where needed. Your responses should be complete, well written, and in conformity with theCSU-Global Guide to Writing and APA Requirements.

The information for part 2 (from the spreadsheet) is on page 2.

Part II
Assume that Big Company decides to acquire 100% of Little Company stock for $200,000. Prepare the consolidated balance sheet and any supporting worksheets.
Big Company Balance Sheet
Assets, Liabilities & Equities	Book Value
Cash	$500,000
AR	$10,000
Inventory	$50,000
Land	$40,000
PP&E	$400,000
Accumulated Depreciation	-$150,000
Patent	$0
Total Assets	$850,000
AP	$110,000
Common Stock	$395,000
Additional Paid In Capital	$300,000
Retained Earnings	$45,000
Total Liabilities & Equity	$850,000
Little Company Balance Sheet
Assets, Liabilities & Equities	Book Value
Cash	$35,000
AR	$10,000
Inventory	$65,000
Land	$40,000
PP&E	$40,000
Accumulated Depreciation	-$5,000
Patent	$0
Total Assets	$185,000
AP	$25,000
Common Stock	$25,000
Additional Paid In Capital	$35,000
Retained Earnings	$100,000
Total Liabilities & Equity	$185,000
Assume that Fair Value of all noncash assets are 25% greater than book value

SEE THE NEXT PAGE FOR AN IMPORTANT NOTE.

NOTE: THE INSTRUCTIONS AT THE TOP OF PAGE 2 ONLY MENTION THE BALANCE SHEET, BUT IF YOU READ THE INSTRUCTIONS ON PAGE 1, YOU WILL SEE THAT THE CONSOLIDATED BALANCE SHEET, INCOME STATEMENT, AND STATEMENT OF EQUITY(IN GOOD FORM) MUST BE PREPARED.KEEP IN MIND THAT THERE ARE 2 PARTS TO THIS ASSIGNMENT. ALSO, KEEP IN MIND THATTHERE ARE 4 REQUIREMENTS FOR PART 2. THE CONSOLIDATED FINANCIAL STATEMENTS IS JUST ONE OF THEM.