This problem expanded the version of p $11-12$ that considers alternative ways in which a firm might apply the fair value option to account for significant influence investment that would normally be accounted for under equal method.

Companies can choose the fair market value option for the investment that otherwise would be accounted for under the equity method.If the fair value opinion is chosen, the investment is shown fair market value in the balance sheet, and unrealized holding gain and losses are recognize in the income statement.However, exactly how a company complies with those broad requirements in up to the company. This problem requires you to consider alternative ways in which a company might apply the fair market value opinion for investments that otherwise would be accounted for under the equity method.

On january $4,2024,$ Runyan Barkey 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 market value opinion to account for this investment. Runyan received dividends of $$2\mathrm{.}00$ per share on December $31,2024.$ The market value of Lavery$$s indenifiable net assets was $800$ billion and:

A$-$ The fair value of Lavery$$s depreciated assets, with an average remaining useful life of six year, exceeded their book value by $$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:

Prepare all appropriate journal entries related to the investment during the $2024,$ assuming Runyan accounts for this investment under the fair value opinion, and accounts for the Lavery investment in a manner similar to what it would for securities for which there is not significant influence. Indicate the effect these journal entries on $2024$ net income, end indicate amount at the which the investment is carried in december $31,2024$ balance sheet.

Prepare all appropriate journal entries related to the investment during the $2024$ assuming Runyan accounts for this investment under the the fair value opinion, but uses equity method accounting to account for Lavery$$s income and dividend, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP. Indicate the effect these journal entires on $2024$ net income, end indicate the amount at which the investment is carried in the december $31,2024,$ balance sheet. $($noye you should end up with same total $2024$ income effect and same caring value on the balance sheet for requirement $1$ and $2.)$