On January 4, 2024, Runyan Bakery paid $354 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 $2.30 per share on December 15, 2024, and Lavery reported net Income of $300 million for the year ended December 31, 2024. The market value of Lavery's common stock at December 31, 2024, was $35 per share. On the purchase date, the book value of Lavery's Identifiable net assets was $950 million and: a. The fair value of Lavery's depreciable assets, with an average remaining useful life of nine years, exceeded their book value by $60 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 2024, 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.
On January 4, 2024, Runyan Bakery paid $354 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 $2.30 per share on December 15, 2024, and Lavery reported net Income of $300 million for the year ended December 31, 2024. The market value of Lavery's common stock at December 31, 2024, was $35 per share. On the purchase date, the book value of Lavery's Identifiable net assets was $950 million and: a. The fair value of Lavery's depreciable assets, with an average remaining useful life of nine years, exceeded their book value by $60 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 2024, 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Haresh
Transcribed Image Text:On January 4, 2024, Runyan Bakery paid $354 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 $2.30 per share on December 15, 2024, and Lavery reported net Income of $300
million for the year ended December 31, 2024. The market value of Lavery's common stock at December 31, 2024, was $35 per share.
On the purchase date, the book value of Lavery's Identifiable net assets was $950 million and:
a. The fair value of Lavery's depreciable assets, with an average remaining useful life of nine years, exceeded their book value by
$60 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 2024, 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.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education