Non-physical asset

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

Impairment entails a company experiencing a permanent reduction in its asset value. These assets can be intangible or fixed assets. The company examines its s equity investment whether there is any possible equity impairment (Christensen, Cottrell, & Baker, 2013). In case the investment has lost its value, it needs to assess the situation to find out whether the decrease in the value of an investment is temporary or not. If the decrease in value is other temporary, Chevron can account for its affiliate impairment by reducing the book value.

Summarize the significant accounting for the approximately ten upstream and downstream investments and comment on the part that these investments have on the balance sheet and income statement of Chevron.

[668 Words]

Non-physical asset