On January 4, 2021, Runyan Bakery paid $340 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 significant influence over Lavery's operations. Runyan received dividends of $2.60 per share on December 15, 2021, and Lavery reported net income of $230 million for the year ended December 31, 2021. The market value of Lavery's common stock at December 31, 2021, was $32 per share. On the purchase date, the book value of Lavery's identifiable net assets was $880 million and:

1. The fair value of Lavery's depreciable assets, with an average remaining useful life of four years, exceeded their book value by $120 million.
2. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

Required: 1. Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment by the equity method. 2. Prepare the journal entries required by Runyan, assuming that the 10 million shares represent a 10% interest in the net assets of Lavery rather than a 30% interest.

Transaction list for required 1:

Record the purchase of Lavery Labeling stock for $340 million.

Record Runyan Bakery's share of Lavery's $230 million net income.

Record the receipt of cash dividends of $2.6 per share on 10 million shares.

Record any necessary entry related to depreciation. The fair value of Lavery's depreciable assets, with an average remaining useful life of four years, exceeded their book value by $120 million.

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 $32 per share.

Transaction list for required 2:

Record the purchase of Lavery Labeling stock for $340 million.

Record Runyan Bakery's share of Lavery's $230 million net income.

Record the receipt of cash dividends of $2.6 per share on 10 million shares.

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 $32 per share.

On January 4, 2021, Runyan Bakery paid $340 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 significant influence over Lavery's operations. Runyan received dividends of $2.60 per share on December 15, 2021, and Lavery reported net income of $230 million for the year ended December 31, 2021. The market value of Lavery's common stock at December 31, 2021, was $32 per share. On the purchase date, the book value of Lavery's identifiable net assets was $880 million and a. The fair value of Lavery's depreciable assets, with an average remaining useful life of four years, exceeded their book value by $120 million. b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: 1. Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment by the equity method. 2. Prepare the journal entries required by Runyan, assuming that the 10 million shares represent a 10% interest in the net assets of Lavery rather than a 30% interest. > Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment by the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).) No Transaction General Journal Debit Credit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment by the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).) No Transaction General Journal Debit Credit 1 1 340 Investment in equity affiliate Cash 340 2 2 No journal entry required X 3 3 Cash 26 Interest revenue x 26 4 4 9 Investment revenue Investment in equity affiliate 9 5 5 No journal entry required Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries required by Runyan, assuming that the 10 million shares represent a 10% interest in the net assets of Lavery rather than a 30% interest. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).) No Transaction General Journal Debit Credit 1 1 Investment in equity securities 340 Cash 340 2 2 Cash x 26 X Investment revenue X 26 X 3 3 x Loss on investment (unrealized, NI) Fair value adjustment 20 X X 20 X 4 4 No journal entry required X