Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in...

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Northwest Paperboard Company, a paper and allied productsmanufacturer, was seeking to gain a foothold in Canada. Toward thatend, the company bought 40% of the outstanding common shares ofVancouver Timber and Milling, Inc., on January 2, 2018, for $590million.

At the date of purchase, the book value of Vancouver's net assetswas $870 million. The book values and fair values for all balancesheet items were the same except for inventory and plantfacilities. The fair value exceeded book value by $10 million forthe inventory and by $15 million for the plant facilities.

The estimated useful life of the plant facilities is 15 years. Allinventory acquired was sold during 2018.

Vancouver reported net income of $210 million for the year endedDecember 31, 2018. Vancouver paid a cash dividend of $50million.

Required:
1. Prepare all appropriate journal entries relatedto the investment during 2018.
2. What amount should Northwest report as itsincome from its investment in Vancouver for the year ended December31, 2018?
3. What amount should Northwest report in itsbalance sheet as its investment in Vancouver?
4. What should Northwest report in its statementof cash flows regarding its investment in Vancouver?

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Q1 Date Account titles and explanations Debit million Credit million 02Jan18 Investment in common stock of Vancouver 35800 Goodwill 23200 Bank 59000 Being investment made in common stock of See Answer

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Northwest Paperboard Company, a paper and allied productsmanufacturer, was seeking to gain a foothold in Canada. Toward thatend, the company bought 40% of the outstanding common shares ofVancouver Timber and Milling, Inc., on January 2, 2018, for $590million.At the date of purchase, the book value of Vancouver's net assetswas $870 million. The book values and fair values for all balancesheet items were the same except for inventory and plantfacilities. The fair value exceeded book value by $10 million forthe inventory and by $15 million for the plant facilities.The estimated useful life of the plant facilities is 15 years. Allinventory acquired was sold during 2018.Vancouver reported net income of $210 million for the year endedDecember 31, 2018. Vancouver paid a cash dividend of $50million.Required:1. Prepare all appropriate journal entries relatedto the investment during 2018.2. What amount should Northwest report as itsincome from its investment in Vancouver for the year ended December31, 2018?3. What amount should Northwest report in itsbalance sheet as its investment in Vancouver?4. What should Northwest report in its statementof cash flows regarding its investment in Vancouver?