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, 2018, for $490 million At the date of purchase, the book value of Vancouver\'s net assets was $820 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 12 years. All inventory acquired was sold during 2018 Vancouver reported net income of $230 million for the year ended December 31, 2018. Vancouver paid a cash dividend of $50 million Required: 1. Prepare all appropriate journal entries related to the investment during 2018 2. What amount should Northwest report as its income from its investment in Vancouver for the year ended December 31, 2018? 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 Rea Req 2 and 3 Req 4 Prepare all appropriate journal entries related to the investment during 2018. (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 View journal entry worksheet Event General Journal Debit Credit Investment in Vancouver T&M; shares 490.0 Cash 490.0 Investment in Vancouver T&M; shares 92.0 Investment revenue 92.0 Cash 20.0 Investment in Vancouver T&M; shares 20.0 4 4 Investment revenue 10.0 Investment in Vancouver T&M; shares 10.0 5 Investment revenue Investment in Vancouver T&M; shares 1.3
The above answer is correct
So i will be providing with explanation on the same
1. Journal entries
1. The company invested 490 million in the Vancouver shares
2. As the company has acquired significant influence in Vancouver the investment is accounted by equity method the total revenue of Vancouver is 230 million the share of company is 92 million.
3. The Vancouver gave 50 million dividend of which 40% i.e. 20 million was received by the company.
4. Has the fair value of the company was increased the company increased the value by 10 million.
5. Here the company had got 15million which is amortized in 12 years period for 1.3 million
2. The income statement cash flow here is only the 20milliom dividend received by the company.
3. The balance sheet cash flow here is only the out flow by way of purchase of shares i.e. for 490 million.
4. The 20million is inflow of cash and 490 million is outflow of cash.
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