On January 1, 2024, Cameron Incorporated bought 30% of the outstanding common stock of Lake Construction Company for $330 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 $700 million. Its book value was $600 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 $110 million. During 2024, Lake declared and paid cash dividends of $20 million. The buildings have a remaining life of 5 years.Record the adjustment for depreciation. Determine the amounts to be reported by Cameron.Note: Amounts to be deducted, including losses and cash outflows, should be indicated with a minus sign. Enter your ain millions, (i.e., 10,000,000 should be entered as 10).($ in millions)a. Investment in Cameron's 2024 balance sheetb. Net investment revenue in the income statementc. Investing activities in the statement of cash flowsRequired 1Required 2 Prepare all appropriate journal entries related to the investment during 2024, assuming Cameron accounts for this inveby the equity method.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enteranswers in millions, (i.e., 10,000,000 should be entered as 10).No1234Transaction1234General JournalInvestment in equity affiliateCashInvestment in equity affiliateInvestment revenueCashInvestment in equity affiliateInvestment revenueInvestment in equity affiliateDebit3303364 xCredit330336A

The equity method of investment accounting is used when a corporation (the investor) purchases a…

Answered: On January 1, 2024, Cameron…

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 15P: Investments in Equity Securities Manson Incorporated reported investments in equity securities of...

See similar textbooks

Related questions

Question

On January 1, 2024, Cameron Incorporated bought 30% of the outstanding common stock of Lake Construction Company for $330 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 $700 million. Its book value was $600 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 $110 million. During 2024, Lake declared and paid cash dividends of $20 million. The buildings have a remaining life of 5 years.

Record the adjustment for depreciation.

Determine the amounts to be reported by Cameron.
Note: Amounts to be deducted, including losses and cash outflows, should be indicated with a minus sign. Enter your a
in millions, (i.e., 10,000,000 should be entered as 10).
($ in millions)
a. Investment in Cameron's 2024 balance sheet
b. Net investment revenue in the income statement
c. Investing activities in the statement of cash flows
Required 1
Required 2

Prepare all appropriate journal entries related to the investment during 2024, assuming Cameron accounts for this inve
by the equity method.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter
answers in millions, (i.e., 10,000,000 should be entered as 10).
No
1
2
3
4
Transaction
1
2
3
4
General Journal
Investment in equity affiliate
Cash
Investment in equity affiliate
Investment revenue
Cash
Investment in equity affiliate
Investment revenue
Investment in equity affiliate
Debit
330
33
6
4 x
Credit
330
33
6
A

Expert Solution

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions