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.

Answer rating: 100% (QA)

The major reason for giving an consideration more than the book value will go to goodwill The other ... View the full answer