On January 4, 2021. Runyan Bakery paid $128 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30 interest in the net assets of Lavery and gave Runyan the ability to exercise igricant influence over Lavery's operations. Runyen chose the fair value option to account for this investment. Runyan received dividends of 52 per share on December 15, 2021, and Lavery reported net income of $170 million for the year ended December 31, 2021 The market value of Lavery's common stock at December 31, 2021, was $31 per share. On the purchase date, the book value of Lavery's identifiable et assets was $20 million and a. The fair value of Levery's depreciable assets, with an average remaining useful life of six years exceeded their book value by 360 b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was ontributable to goodwil million Required: 1-a. Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence 1-5. Calculate the effect of these Journal entries on 2021 net income, and the amount of which the investment is carried in the December 31, 2021. balance sheet. 2-. Prepare all appropriate Journal entries related to the investment during 2021. assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery's income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP 2-b Calculate the effect of these journal entries on 2021 net income, and the amount at which the investment is carried in the December 31, 2021. balance sheet (Note: You should end up with the same total 2021 Income effect and same carrying value on the balance sheet for requirements 1 and 2) Complete this question by entering your answers in the tabs below. Hec 1A Reg 28 Reg 16 Reg 24 req IA reqi Regn reg Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment under the Fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions (ie., 10,000,000 should be entered as 10).) Show less View transaction list 1 Record the purchase of Lavery Labeling stock for $328 million. th 2. Record Runyan Bakery's share of Lavery's $170 million net income. 3 Record the receipt of cash dividends of $2.5 per share on 10 million shares. Credit 4 Record any necessary adjusting entry to correctly report the investment on the balance sheet. The market value of Lavery's common stock at December 31, 2021 was 531 per share. Vote : = journal entry has been entered Record entry Clear entry View general journal Req 1A Req IB Req 2A Req 28 Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery's income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAR. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (.e., 10,000,000 should be entered as 10).) Show less View transaction list 1 Record the purchase of Lavery Labeling stock for $328 million. 2 Record Runyan Bakery's share of Lavery's $170 million net income. 3 Record the receipt of cash dividends of $2.5 per share on 10 million shares. Credit 4 Record any necessary entry related to depreciation. The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $60 million. 5 Record any necessary adjusting entry to correctly report the investment on the balance sheet. The market value Note : = journal entry has been entered Record entry Clear entry View general journal
