12 Equity Method and FV option

Ecember value of laverys depreciable laverys common

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Unformatted text preview: 00 million and: a.ecember value of Lavery's depreciable Lavery's common stock at December 31, 2013, was $31 per share. On the purchase date,$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. Calculation of excess cost over BV: Cost BV of the net assets Excess cost over BV Allocation of excess cost: Depreciable assets GW 324,000,000 240,000,000 >800million*30% 84,000,000 Amortization 80million*30% 24,000,000 60,000,000 4,000,000 >2400000/6 N/A 1/4/2013 Investment in Lavery Co Cash 12/31/2013 Investment in Lavery Co Investment Rev 48,000,000 12/31/2013 Cash Investment in Lavery Co 20,000,000 12/31/2013 Investment Rev Investmen...
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