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. Required: 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. Determine the amounts to be reported by Cameron. 1 Record the investment in Lake Construction shares. 2 Record the investor's share of net income. 3 Record the cash dividends. 4 Record the adjustment for depreciation.
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.
Required:
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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. -
Determine the amounts to be reported by Cameron.
1 Record the investment in Lake Construction shares.
2 Record the investor's share of net income.
3 Record the cash dividends.
4 Record the adjustment for
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