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.