1. 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, Lake's 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 exceeding book value. Lake's 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. Camerons investment in Lake will affect Camerons 2016 net income by:

A. Increase net income by $30 million.

B. Increase net income by $28 million.

C. Increase net income by $18 million.

D. Increase net income by $12 million.

E. There is no effect on net income.

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