On January 1, 2013, Cameron Inc bought 30 of the outstanding common stock of Lake Construction Company for $330 million cash At the date of acquisition of the stock, Lake's net assets had a fair value of $700 million Their 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 Lakes net income for the year ended December 31, 2013, was $110 million During 2013, Lake declared and paid cash dividends of $20 million The buildings have a remaining life of 5 years Required Complete the table below and prepare all appropriate journal entries related to the investment during 2013, assuming Cameron accounts for this investment by the equity method (If no entry is required for a particular event, select No journal entry required in the first account field Enter your answers in millions, (i e , 10,000,000 should be entered as 10) ) ($ in millions) Investee Net Assets Ownership Interest Net Assets Purchased Difference Attributable to Cost $330 Fair Value Cameron's assets x Book Value Cameron's assets x Depreciation adjustment Years Adjustment Undervaluation of assets $15 Journal Entries 1 Record the investment in Lake Construction shares 2 Record the investment revenue 3 Record the cash dividends 4 Record the adjustment for depreciation Record Entries using following account choices No journal entry required AFS investments Cash Cash surrender value of life insurance Discount on bond investment Fair value adjustment Gain on life insurance settlement Gain on sale of investments Insurance expense Investment in bonds Investment in Lake Construction shares Investment in preferred shares Investment in U S treasury bills Investment in U S treasury bonds Investment revenue Investment revenue receivable Loss on sale of investments Net unrealized holding gains and losses I S Net unrealized holding gains and losses OCI Other than temporary impairment loss I S Other than temporary impairment loss OCI Recovery of other than temporary impairment loss I S Retained earnings 2 Determine the amounts to be reported by Cameron (Enter your answers in millions,(i e , 10,000,000 should be entered as 10) ) ($ in millions) a Investment in Camerons 2013 balance sheet b Investment revenue in the income statement c Investment in the statement of cash flows

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 06, 2024

On January 1, 2013, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $330 million cash. At the date of

On January 1, 2013, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $330 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $700 million. Their 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. Lakes net income for the year ended December 31, 2013, was $110 million. During 2013, 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 2013, assuming Cameron accounts for this investment by the equity method. (If no entry is required for a particular 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).)

($ in millions)	Investee Net Assets		Ownership Interest			Net Assets Purchased	Difference	Attributable to:
Cost									$330
Fair Value Cameron's assets		x		%	=
Book Value Cameron's assets		x		%	=

Depreciation adjustment:			Years			Adjustment
Undervaluation of assets	$15	/			=