Exercise 12-21 Equity method [LO12-5, 12-6]

On January 1, 2016, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash. At the date of acquisition of the stock, Lakes net assets had a fair value of $900 million. Their book value was $800 million. The difference was attributable to the fair value of Lakes buildings and its land exceeding book value, each accounting for one-half of the difference. Lakes net income for the year ended December 31, 2016, was $150 million. During 2016, 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 2016, assuming Cameron accounts for this investment by the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).) 1. Record the investment in Lake Construction shares. 2. Record the investment revenue 3. Record the cash dividends. 4. Record the adjustment for depreciation. 2. Determine the amounts to be reported by Cameron. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)

a. investment in Cameron's 2016 balance sheet

b. Investment Revenue in the income statement

c. Investing activities in the statement of cash flows