Business, 03.03.2020 00:37, christiantorres57

On January 4, 2018, Runyan Bakery paid $346 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 chose the fair value option to account for this investment. Runyan received dividends of $3 per share on December 15, 2018, and Lavery reported net income of $260 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018, was $32 per share. On the purchase date, the book value of Lavery's net assets was $910 million and:

The fair value of Lavery's depreciable assets, with an average remaining useful life of [a(27)] years, exceeded their book value by $60 million.

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-a. Prepare all appropriate journal entries related to the investment during 2018, 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-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.
2-a. Prepare all appropriate journal entries related to the investment during 2018, 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 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

Answers: 3

Show answers

Other questions on the subject: Business

Business, 21.06.2019 21:00, kp2078

The owners of backstreets italian restaurant are considering starting a delivery service forpizza and their other italian dishes in the small college town where they are located. theycan purchase a used delivery van and have it painted with their name and logo for $21,500.they can hire part-time drivers who will work in the evenings from 5 p. m. to 10 p. m. for$8 per hour. the drivers are mostly college students who study at the restaurant when theyare not making deliveries. during the day, there are so few deliveries that the regular employeescan handle them. the owners estimate that the van will last 5 years (365 days per year)before it has to be replaced and that each delivery will cost about $1.35 in gas and othermaintenance costs (including tires, oil, scheduled service, they also estimate that onaverage each delivery order will cost $15 for direct labor and ingredients to prepare andpackage, and will generate $34 in revenue. a. how many delivery orders must backstreets make each month in order for the service to break even? b. the owners believe that if they have approximately the break-even number of deliveries during the week, they will at least double that number on fridays, saturdays, and sundays. if that’s the case, how much profit will they make, at a minimum, from their delivery service each month (4 weeks per month)?

Answers: 2

continue

Business, 22.06.2019 01:50, jjaheimhicks3419

Amanda rice has just arranged to purchase a $640,000 vacation home in the bahamas with a 20 percent down payment. the mortgage has a 7 percent apr compounded monthly and calls for equal monthly payments over the next 30 years. her first payment will be due one month from now. however, the mortgage has an eight-year balloon payment, meaning that the balance of the loan must be paid off at the end of year 8. there were no other transaction costs or finance charges. how much will amanda’s balloon payment be in eight years

Answers: 3

continue

Business, 22.06.2019 02:30, kseniyayakimno

Luc do purchased stocks for $6,000. he paid $4,000 in cash and borrowed $2,000 from the brokerage firm. he bought 100 shares at $60.00 per share ($6,000 total). the loan has an annual interest rate of 8 percent. six months later, luc do sold the stock for $65 per share. he paid a commission of $120 and repaid the loan. his net profit was how much? pls

Answers: 3

continue

Business, 22.06.2019 11:00, mateoperkins

What is the advantage of developing criteria for assessing the effectiveness of business products and processes? a. assessment criteria are answers. b. assessment criteria are inexpensive. c. assessment criteria provide you with a list of relevant things to measure. d. assessment criteria provide you with a list of people to contact to learn more about process mentoring.

Answers: 3

continue

Do you know the correct answer?

On January 4, 2018, Runyan Bakery paid $346 million for 10 million shares of Lavery Labeling Company...