Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward thatend, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2021, for $440million.At the date of purchase, the book value of Vancouver's net assets was $795 million. The book values and fair values for all balancesheet items were the same except for Inventory and plant facilities. The fair value exceeded book value by $5 million for the Inventoryand by $30 million for the plant facilities.The estimated useful life of the plant facilities is 15 years. All Inventory acquired was sold during 2021.Vancouver reported net Income of $180 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $50 million.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.Req 1Req 2 and 3Prepare all appropriate journal entries related to the investment during 2021. (If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should beentered as 5.5).)View transaction list1Journal entry worksheet<2Req 4Record the entry related to the purchase.Note: Enter debits before credits.Transaction1Record entryGeneral JournalClear entry< Req 1DebitCreditView general JournalReq 2 and 3 > Req 1Req 2 and 3What amount should Northwest report as its income from its investment in Vancouver for the year ended December 31, 2021and in its balance sheet as its investment in Vancouver? (Enter your answers in millions rounded to 1 decimal place, (i.e.,5,500,000 should be entered as 5.5).)2.3. Balance sheet amountIncome statement amountReq 4millionmillion< Req 1Req 4 >

If a company purchases another company's shares with its own funds, the following rules apply: The…

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?

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?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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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 $410 million.At the date of purchase, the book value of Vancouver's net assets was $780 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 $10 million for the inventory and by $15 million for the plant facilities.The estimated useful life of the plant facilities is 15 years. All inventory acquired was sold during 2021.Vancouver reported net income of $150 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $20 million.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…
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