On January 4, 2013, Runyan Bakery paid $358 miilion for 10 million shares of Lavery Labeling Company's common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to excercise significant influence over Lavery's operations. Runyan received dividends of $3.5 per share on December 31, 2013. The market value of Lavery's common stock at December 31,2013, was $34 per share. On the purchase date, the book value of Lavery's net assets was $970 million and:
a) the fair value of Lavery's depreciable assets, with an average remaining useful life of 7 years exceeded their book value of $70 million.
b) the remainder of the excess of the cost of the investment over the cook value of net assets purchased was attributable to goodwill.
1) Record all the appropriate jpournal entries related to the investment during 2013, assuming Runyun accounts for theis investment by the equity method. (record entries related to the purchase, to net income, to dividends, and to the depreciation adjustment.)
2)Prpare the journal entries required by Runyan, assuming that the 10 million shares represent a 10% interest in the net assets if Lavery rather than a 30% and that Runay accounts for the investment as available for sale.