1. On Janvary 4, 2012, Runyan Bakery pad $342 miion fo. millon shares of Lavery Labeling ‘Company common stock. The investment represents inthe net assets of Lavery {and gave Runyan the ably to exercise significant infuenoe Ove" Tavery's operations. Runyan ‘ceived avidends of $3.5 per share on December 15, 2013, and Lavery reported net income of '5240 millon forthe year endes 31, 2013, The market value of Lavery’s common stock ‘at December 31,2018, was § per share2On the purchase date, be book value of Lavery net ‘gate was $890 millon and 8.The fae valve of Laver's depreciable assets, with an average remaining use feof five years, exceeded their book value by $100 milion The remainder ofthe excace ofthe cot of the investment over the book value of nt assets purchased ‘was atabutae to good 2 Construction Forms Corporation buys securities tobe aval forsale when crcumstanoes warrant, not to proft from short-term aferences in price and not necessary to hold debt secures to matuny. THe folowing selected vansactions relate to investment acvtes of Constuson Forms whase fiscal year lends on December 31. No investments were held by Consbucton Forms a the beginning ofthe Yea. 2013 “Mar. 2 Purchased 1 millon Platinum Gauges, Inc, common shares fr $34 millon, including brokerage {ees and commissions. ‘Apr. 12 Purchased $25 millon of 10% bong BE VUE TO ZEN WIESE COPECO “ly 18 Recelves cash divsends of $1 milln onthe investment in Platnum Gauges, Inc, common shares (Oct. 15 Recsived semiannual interest of $1.25 millon on the investment in Zenith bonds. 46 Sold the Zenith bonds for $30 milion Nov. 1 Purchased £00,000 LTD Intemational prefered shares fr $51 millon incusing brokerage fees and commissions Dec. 31 Recorded the necessary adjusting entry) relating tothe Investments The market pies ofthe Investments are $36 per share fr Platnum Gauges, nc, and $96 per share for LTD. Intemational preferes shares 2014 Jan, 23 Sold hal the Patinum Gauges, In, shares fr $38 per share. ‘Mar. 1 Sold te LTD internatonal prefered shares for $86 per share.Tohl co 100% 1, 140,000,000 x 20%x — H0% FYH. 3Y2,000,000 B00 Ges gv $90,000,209 foes Buq ado gee 267,000,000 Fees 48,000,000 TE .000, 000 Allocoket lo / eens + 100,059,000 3% —— E 40,000, 080 Trews BS CYS, 208,900 . Fla Conmyys0% ao $ a fo GH @ > 1140.09 9d{150 points Pretens? Aust cad fora ser Problem 12-9 Available-forsale and equity method investments compared (LO123, 12-4, 125, 12- a ‘On January 4, 2013, Runyan Bakery paid $242 millon for 10 millon shares of Lavery Labeling Company ‘Common stock. The investment represents @ 30% interest inthe net assets of Lavery and gave Runyan the abily fo exercise signeant influence over Laver’s operations. Runyan received dividends of $3.5, per share on December 15, 2013, and Lavery reported net income of $240 millon for the year ended Becember 21, 2013. The market value of Lavery’s common stock al December 31, 2013, was $31 per share. On the purchase date, the book value of Lavery net assets was $890 milion an 2a.The fair value of Laver/'s depreciable assets, with an average remaining useful life of fve years, ‘exceeded their book value by $100 milion b The remainder ofthe excess ofthe cost ofthe investment over the book value of net assets purchased was atributable to goodwil, Required: T Prepare all appropiate journal enves related to the investment during 2013, assuming Runyan ‘Sccounts for this investment by the equity method. (Enter your answors in millions. If no entry is Fequired for a particular event, select "No journal entry required” inthe first account field) Event ana Journal Dest creat (Dpto + vesmentin Lavery Labeling shares 342 Cash wa Forte Lavery Labog hares 2 Investment vane n Cos 3 Investment in Lavery Labeling shores a * Tvedinert vena é Tnvedimentin Lavery Labeling shares é No oural entry required