On January 1, 2024, Cameron Incorporated bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $900 million. Its book value was $800 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake's net income for the year ended December 31, 2024, was $150 million. During 2024, Lake declared and paid cash dividends of $30 million. The buildings have a remaining life of 10 years. Required: 1. Complete the table below and prepare all appropriate journal entries related to the investment during 2024, assuming Cameron accounts for this investment by the equity method. 2. Determine the amounts to be reported by Cameron. Complete this question by entering your answers in the tabs below. Calculation Required 1 Required 2 Complete the table below. Note: Enter your answers in millions, (i.e., 10,000,000 should be entered as 10). (S in millions) Investee Net Assets Ownership Interest Net Assets Purchased Difference Attributable to: Cost $ 300 Fair Value Lake Construction's assets %= Book Value Lake Construction's assets Depreciation adjustment: Investment revenue %= Years Adjustment
On January 1, 2024, Cameron Incorporated bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $900 million. Its book value was $800 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake's net income for the year ended December 31, 2024, was $150 million. During 2024, Lake declared and paid cash dividends of $30 million. The buildings have a remaining life of 10 years. Required: 1. Complete the table below and prepare all appropriate journal entries related to the investment during 2024, assuming Cameron accounts for this investment by the equity method. 2. Determine the amounts to be reported by Cameron. Complete this question by entering your answers in the tabs below. Calculation Required 1 Required 2 Complete the table below. Note: Enter your answers in millions, (i.e., 10,000,000 should be entered as 10). (S in millions) Investee Net Assets Ownership Interest Net Assets Purchased Difference Attributable to: Cost $ 300 Fair Value Lake Construction's assets %= Book Value Lake Construction's assets Depreciation adjustment: Investment revenue %= Years Adjustment
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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Question
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no
Transcribed Image Text:On January 1, 2024, Cameron Incorporated bought 20% of the outstanding common stock of Lake Construction Company for $300
million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock,
Lake's net assets had a fair value of $900 million. Its book value was $800 million. The difference was attributable to the fair value of
Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake's net income for the year
ended December 31, 2024, was $150 million. During 2024, Lake declared and paid cash dividends of $30 million. The buildings have a
remaining life of 10 years.
Required:
1. Complete the table below and prepare all appropriate journal entries related to the investment during 2024, assuming Cameron
accounts for this investment by the equity method.
2. Determine the amounts to be reported by Cameron.
Complete this question by entering your answers in the tabs below.
Calculation
Required 1 Required 2
Complete the table below.
Note: Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).
(S in millions)
Investee
Net Assets
Ownership
Interest
Net Assets
Purchased
Difference
Attributable to:
Cost
$
300
Fair Value Lake Construction's assets
%=
Book Value Lake Construction's assets
Depreciation adjustment:
Investment revenue
%=
Years
Adjustment
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