1) Assume Large Corporation Invested $ 600,000 for Small Corporation and theestimated Fair Market Values of Assets, Liabilities and Equity Accounts are as
follows:
Assets
Amount $
Liabilities
Amount $
Account Receivable
125,000 Account Payables
180,000
Inventory
50,000 Retained Earnings
120,000
LT Marketable Securities
55,000 Commons Stock
100,000
PP & E
170,000
400,000
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
= Common
+ Additional
+ Retained
Book Value
Stock
Paid in
Earnings
Capital
Beginning
600
150
550
(100)
Book Value
+ Net Income
– Dividend
Ending
Book Value
200
200
(50)
(50)
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)
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