On January 4, 2024, Runyan Bakery paid $334 millionfor 10 million shares of Lavery Labeling Companycommon stock. The investment represents a 30%interest in the net assets of Lavery and gave Runyan theability to exercise significant influence over Lavery'soperations. Runyan received dividends of $4.00 pershare on December 15, 2024, and Lavery reported netincome of $200 million for the year ended December31, 2024. The market value of Lavery's common stockat December 31, 2024, was $31 per share. On thepurchase date, the book value of Lavery's identifiablenet assets was $850 million and: The fair value ofLavery's depreciable assets, with an average remaininguseful life of nine years, exceeded their book value by $90 million. The remainder of the excess of the cost ofthe investment over the book value of net assetspurchased was attributable to goodwill. Required:Prepare all appropriate journal entries related to theinvestment during 2024, assuming Runyan accounts forthis investment by the equity method. Prepare thejournal entries required by Runyan, assuming that the10 million shares represent a 10% interest in the netassets of Lavery rather than a 30% interest.

The equity method of accounting is used to account for one organization's investment in another…

purchased was attributable to goodwill. Required: Prepare all appropriate journal entries related to the investment during 2024, assuming Runyan accounts for this investment by the equity method. Prepare the

purchased was attributable to goodwill. Required: Prepare all appropriate journal entries related to the investment during 2024, assuming Runyan accounts for this investment by the equity method. Prepare the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 4, 2024, Runyan Bakery paid $344 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 $4.50 per share on December 15, 2024, and Lavery reported net income of $250 million for the year ended December 31, 2024. The market value of Lavery's common stock at December 31, 2024, was $32 per share. On the purchase date, the book value of Lavery's identifiable net assets was $900 million and: a. The fair value of Lavery's depreciable assets, with an average remaining useful life of seven years, exceeded their book value by $70 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…
On January 4, 2024, Runyan Bakery paid $334 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 $4.00 per share on December 15, 2024, and Lavery reported net income of $200 million for the year ended December 31, 2024. The market value of Lavery's common stock at December 31, 2024, was $31 per share. On the purchase date, the book value of Lavery's identifiable net assets was $850 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 $90 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…
On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Companycommon 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 onDecember 15, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018. Themarket value of Lavery’s common stock at December 31, 2018, was $31 per share. On the purchase date, thebook value of Lavery’s net assets was $800 million and:a. The fair value of Lavery’s depreciable assets, with an average remaining useful life of six years, exceededtheir book value by $80 million.b. The remainder of the excess of the cost of the investment over the book value of net assets purchased wasattributable to goodwill.Required:1. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts forthis investment by the…
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.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…
On January 4, 2021, Runyan Bakery paid $334 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 $4.00 per share on December 15, 2021, and Lavery reported net income of $200 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 $850 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 $90 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…
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On January 4, 2016, 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, 2016, and Lavery reported net income of $160 million for the year ended December 31, 2016. The market value of Lavery’s common stock at December 31, 2016, was $31 per share. On the purchase date, the book value of Lavery’s 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. 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 2016, assuming Runyan accounts for this…
On January 2, 2019, SurfCity Co. purchased 15,000 shares of Topsail, Inc. for $20 per share. The investment represented 15% of Topsail's outstanding shares. On December 31, 2019, each share of Topsail was selling for $18 per share and on December 31, 2020, each share of Topsail was selling for $25 per share. Topsail declared and paid dividends totaling $25,000 in both 2019 and 2020. What was the total amount reported on the income statement in 2020 by SurfCity for its investment in Topsail? Group of answer choices $125,000 $78,750 $108,750 $100,000