Question
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2021, for $520 million. At the date of purchase, the book value of Vancouver's net assets was $835 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $5 million for the inventory and by $30 million for the plant facilities. The estimated useful life of the plant facilities is 15 years. All inventory acquired was sold during 2021. Vancouver reported net income of $140 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $30 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2021.
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1
Record the entry related to the purchase.
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2
Record the entry related to the net income.
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3
Record the entry related to the dividends.
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4
Record the entry related to the inventory adjustment.
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5
Record the entry related to the depreciation adjustment.
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