If a company purchases 100% of another company and the amount paid is more than the book value of the company purchased and a positive differential exists, explain the three reasons this might occur. For each of the three provided reasons, explain the process and journal entries that would be made. Provide an example of a company purchase and the result of the overpayment.
If a company purchases 100% of another company and the amount paid is less than the book value of the company purchased and a bargain purchase differential exists, explain the three reasons this might occur. For each of the three reasons, explain the process and journal entries that would be made. Provide an example of a company purchase and the result of the underpayment.
Part 2
The reporting treatment for investments in common stock depends upon the level of ownership and the ability to influence polices of the investee. This reporting treatment may even change over time as ownership levels or other factors change. When investees are not consolidated, the investments are generally reported in the investment section of the balance sheet. However, the investor’s income from those investments is not always easy to find in the investor’s income statement.
How does Chevron Corporation account for the issuance of stock by affiliates?
How does Chevron account for impairments in affiliates?
Summarize the significant accounting for the approximately 10 upstream and downstream investments and comment on the part that these investments have on the balance sheet and income statement of Chevron.
Requirements: 2 Pages
Please separate the two parts
Answer preview
liabilities at the fair value and cash account. The second reason is the market value for some assets like real estate, which have a greater market value above the book value. Lastly, a company can be sold more than the book value if it has made more proceeds. The company needs to debit cash accounts and credit gain on disposal to make a journal entry. A good example of a company that bought more than its book value is Zoox, a company that focuses on manufacturing autonomous vehicles, robotics, and transportation.
A case where the company is sold at a lower cost than book value
A company may be sold lower than the book value. One of the reasons that the company may be sold less than the book value is that the company has been making losses in the market value. The company can make journey entities by crediting bank accounts and debiting asset disposal accounts (Kumar & Sharma, 2019). The second reason is that the company’s market value is lower than its book value. An excess bargain is another reason that a company may opt
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