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Methods of Business Organization Or if you have a better topic after paper is completed
Finance & Accounting
Pages 3 (753 words)
Business Acquisitions Student’s Name Institution Accounting Methods GAAP (Generally Accepted Accounting Principle) acknowledges several accounting methods for an investing corporation. This can be Fair- value method or Equity method. In addition to these two, is the Consolidation formula for the reporting stands (Sevin, S., Schroeder, R., 2005)…
This is primarily because the Big Co. only has a noticeable control of the Small Co. (3000share of the 10000 share is a considerable control). For the case of Little Co., Big Co. has a fairly small control which amounts to about one percent of the issued (i.e. owns 1000 shares of the 10000 shares) stock. For this reason, Fair value accounting formula will be employed in treating the accounts work that relates the two companies. Considering the case in Tiny Co., Big Co. has total control on this company and hence the method of consolidation of the accounts will be used. The relationship between Big Co. and Tiny Co. will be viewed as one business. The three methods will be applied as has been outlined mainly because of the voting control Big Co. has on each of them. Journal Entries The ownership which Big Co. has on Little Co. of about 1%, the accounting will be guided entirely by fair value method. This is reflected right away from the journal entries which are the original books of accounts where transactions are recorded as they occur. The journal entries describing the transactions between Big Co. and Small Co. will be directed by the stipulations of equity method. All these transactions are as outlined below in the following tables. Transaction between Big Co. ...
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