Morgan Company acquires all of the outstanding shares of Jennings, Inc., for cash. Morgan transfers consideration more than the fair value of the companys net assets.

In your opinion, how should the payment in excess of fair value be accounted for in the consolidation process? What in the content you reviewed this week led you to your conclusion?

Now assume Jennings, Inc. was having liquidity problems, and as a result, it sells all of its outstanding stock to Morgan Company for cash. Because of Jennings, Inc.s problems, Morgan Company is able to acquire this stock at less than fair value of the companys net assets.

In your opinion, how is this reduction in price accounted for within the consolidation process? What in the content you reviewed this week led you to your conclusion?