Runyan bakery paid 324 million for 10 million shares of

Reference no: EM13567579

Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The invesment represnets 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 Dec 15, 2013, and Lavery reported net income of $160 million for the year ended Dec 1, 2013. The market value of Lavery's common stock at Dec 31, 2013 was $31 per share. On the purchase date, the book value of Lavery's common stock at DEc 31, 2013 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 2013, 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. Thank you for helping.

Reference no: EM13567579

Questions Cloud

Wood-mode company is involved in the design manufacture and : wood-mode company is involved in the design manufacture and installation of various types of wood products for large

Bottleneck profit product k has a unit contribution margin : bottleneck profit product k has a unit contribution margin of 160. product l has a unit contribution margin of 80.

A project lost one third of its value the first year then : a project lost one third of its value the first year then gained fifty percent of its value then lost two thirds of its

In the month of april a department had 500 units in the : in the month of april a department had 500 units in the beginning work in process inventory that were 60 complete.

Runyan bakery paid 324 million for 10 million shares of : runyan bakery paid 324 million for 10 million shares of lavery labeling company common stock. the invesment represnets

Eplain liquidity ratio how are they useful in financial : explain liquidity ratio. how are they useful in financial accounting? how the results of various liquidity ratios may

In the month of april a department had 500 units in the : in the month of april a department had 500 units in the beginning work in process inventory that were 60 complete.

Kannan carpets inc has asked you to calculate the companys : kannan carpets inc. has asked you to calculate the companys current ratio for 2001. all you have is a partial balance

The balanced scorecard integrates financial and : the balanced scorecard integrates financial and nonfinancial measures that relate to four perspectives financial

User Account

All Pages