On January Runyan Bakery pald $ million for million shares of Lavery Labeling Company common stock. The
Investment represents a interest in the net assets of Lavery and gave Runyan the abllity to exercise significant
Influence over Lavery's operations. Runyan recelved dividends of $ per share on December and Lavery
reported net income of $ million for the year ended December The market value of Lavery's common stock at
December was $ per share. On the purchase date, the book value of Lavery's identifiable net assets was $
million and:
a The falr value of Lavery's depreclable assets, with an average remalning useful life of seven years, exceeded thelr book
value by $ 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:
Prepare all approprlate journal entrles related to the Investment during assuming Runyan accounts for this
Investment by the equity method.
Prepare the journal entrles required by Runyan, assuming that the million shares represent a interest in the net
assets of Lavery rather than a interest.
