Question
On January 1, 2021, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $600 million cash, giving Cameron the ability
On January 1, 2021, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $600 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 $800 million. Its book value was $700 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, 2021, was $300 million. During 2021, Lake declared and paid cash dividends of $20 million. The buildings have a remaining life of 5 years.
Journal
*record the investment in lake Construction shares
*investors share of net income
*cash dividends
*adjustment for depreciation
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