Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P 12-10 On January 4, 2021, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a

image text in transcribed

P 12-10 On January 4, 2021, Runyan Bakery paid $324 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 $2.00 per share on December 15, 2021, and Lavery reported net income of $160 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 net assets was $800 million and: a. The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million. Investment securities and equity method investments compared LO12-6, LO12-7 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Introductory Financial Accounting For Business

Authors: Thomas P. Edmonds, Christopher Edmonds

2nd Edition

1260575306, 9781260575309

More Books

Students also viewed these Accounting questions

Question

Write a paper on Equal Employment Opportunity Commission in detail

Answered: 1 week ago

Question

Determine whether the series is convergent or divergent.

Answered: 1 week ago

Question

OUTCOME 4 Explain how labour relations differ around the world.

Answered: 1 week ago