Question

I need my work checked & a little help answering req 1B && 2B, im sure i did 1B wrong

On January 4, 2018, Runyan Bakery paid $358 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $3.50 per share on December 15, 2018, and Lavery reported net income of $320 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018, 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 by $70 million b. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwil Required: 1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment unde the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence. 1-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet. 2-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment unde the fair value option, but uses equity method accounting to account for Lavery's income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP 2-b Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet. Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Req 2A Req 2B

Answer 1

Please find below table to compute desired results: -

1.1 Preparartion of Journal entries under Fair Value Method
		Debit	Credit
Purchase	investment in Lavery lableling shares	358
	cash		358
Dividends	cash	35		3.5*10
	Dividend revenue		35
Net income	No entry rquired
Adjustment entry	Net Unrealised gains and loses -OCI	18		(358/10-34)*10
	Fair Value Adjustment		18
Effect of entries on Income
Net of Dividend Received and Loss on reduction of fair value is Effected on income. Total effect	17	35-18
Amount carried in december 31, Balance sheet
Investment shown at Market value. Total investment	340	358-18
2.1 Preparartion of Journal entries under Equity Value Method
Purchase	investment in Lavery lableling stock	358
	cash		358
Net income	investment in Lavery lableling stock	96		320*30%
	revenue from investmetn in lavery lableling stock		96
Dividends	cash	35		3.5*10
	Investment in Lavery lableling shares		35
Adjistmetn for fair value	NO Entry Required
Depreciation adjustment	Investment revenue	3.5
	Investment in Lavery lableling stock		3.5
Effect of entries on Income
Net of revenue earned and depreciation of excess value is Effected on income. Total effect	92.5	96-3.5
Amount carried in december 31, Balance sheet
Investment shown at December 31,	415.5	358+96-35-3.5