Question

Seved Help Save & Exit Check Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling. Inc., on January 2, 2021, for $420 million. At the date of purchase, the book value of Vancouver's net assets was $785 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $5 million for the inventory and by $30 million for the plant facilities. nts Skipped The estimated useful life of the plant facilities is 15 years. All inventory acquired was sold during 2021. Print Vancouver reported net income of $160 million for the vear ended December 31, 2021. Vancouver paid a cash dividend of $30 million. eferences Required: 1. Prepare all appropriate journal entries related to the investment during 2021. 2. What amount should Northwest report as its income from its investment in Vancouver for the year ended December 31, 2021? 3. What amount should Northwest report in its balance sheet as its investment in Vancouver? 4. What should Northwest report in Its statement of cash flows regarding its investment in Vancouver? Complete this question by entering your answers in the tabs below. Reg 4 Req 2 and 3 Req 1 Prepare all appropriate journal entries related to the investment during 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (I.e., 5,500,000 should be entered as 5.5).) View transaction list 00

1. record entry related to purchase
2. record entry related to net income
3. record entry related to dividends
4. record entry related to the inventory adjustment.
5. record entry related to the depreciation adjustment.

thanks in advance!

Answer 1

Answer-Journal Entries:-

Date	Account Title and Explanation	Debit ($)	Credit ($)
Jan.2,2021	Investment in Incorporation VT Shares	420,000,000
	Cash		420,000,000
	(To record purchase of investment)
Dec.31	Investment in Incorporation VT Shares	64,000,000
	Investment Revenue		64,000,000
	(To record the share of net income as revenue from operations) ($160,000,000*40%= $64,000,000)
Dec.31	Cash	12,000,000
	Investment in Incorporation VT Shares		12,000,000
	(To record receipts of dividend) $30,000,000*40%=$12,000,000)
Dec.31	Investment Revenue	2,000,000
	Investment in Incorporation VT Shares		2,000,000
	(To record inventory adjustment) ($5,000,000*40%=$2,000,000)
Dec.31	Investment Revenue	800,000
	Investment in Incorporation VT Shares		800,000
	(To record depreciation adjustment) ($30,000,000*40%=$12,000,000/ 15 years)

2-The amount to be reported by Company NP as income from investment in income statement:-

Date	Details	Debit ($)	Date	Details	Credit ($)
2021	Inventory	2,000,000	2021	Share of Income	64,000,000
	Depreciation	800,000
	Total	2,800,000		Total	64,000,000
				Balance	61,200,000

3-The amount to be reported by Company NP as income from investment in Balance Sheet:-

Date	Details	Debit ($)	Date	Details	Credit ($)
2021	Cost	$420,000,000	2021	Dividends	12,000,000
	Share of Income	$64,000,000		Inventory	2,000,000
				Depreciation	800,000
	Total	484,000,000		Total	14,800,000
	Balance	$469,200,000

4-Company NP

Statement of Cash Flows

For the year ended December 31,2021

Cash Flows from Operating Activities
Dividends	$12,000,000
Cash Flows from Investing Activities
Purchase of investment in Incorporation VT Shares	$420,000,000