Fair value option; equity method investments; financial statement effects $$ LO$125,$ LO$126,$ LO$127,$ LO$128[$This problem is an expanded version of P $1211$ that considers alternative ways in which a firm might apply the fair value option to account for significant$-$influence investments that would normally be accounted for under the equity method.$]$ Companies can choose the fair value option for investments that otherwise would be accounted for under the equity method. If the fair value option is chosen, the investment is shown at fair value in the balance sheet, and unrealized holding gains and losses are recognized in the income statement. However, exactly how a company complies with those broad requirements is up to the company. This problem requires you to consider alternative ways in which a company might apply the fair value option for investments that otherwise would be accounted for under the equity method. On January $4,2024,$ Runyan Bakery paid $$324$ 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$$s operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $$2\mathrm{.}00$ per share on December $15,2024,$ and Lavery reported net income of $$160$ million for the year ended December $31,2024.$ The market value of Lavery$$s common stock at December $31,2024,$ was $$31$ per share. On the purchase date, the book value of Lavery$$s identifiable net assets was $$800$ million and: The fair value of Lavery$$s depreciable assets, with an average remaining useful life of six years, exceeded their book value by $$80$ million. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Prepare all appropriate journal entries related to the investment during $2024,$ assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence. Indicate the effect of these journal entries on $2024$ net income, and indicate the amount at which the investment is carried in the December $31,2024,$ balance sheet. Prepare all appropriate journal entries related to the investment during $2024,$ assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery$$s income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP. Indicate the effect of these journal entries on $2024$ net income, and indicate the amount at which the investment is carried in the December $31,2024,$ balance sheet. $($Note: You should end up with the same total $2024$ income effect and same carrying value on the balance sheet for requirements $1$ and $2.)$ P $1213$ Equity method; financial statement effects $$ LO$126,$ LO$127$ answer exactly the way i would for an accounting class with calculations and the exact set up to submit it