Part 1: LA acquired 50% of Oakland for $600 million. LA raised the funds by issuing stock and is deemed to have significant influence, but not control in Oakland. LA follows US GAAP. Complete the table below using the Equity method. The fixed assets had a fair value that was $50 greater than book value and assets are depreciated over 5 years for Oakland. FILL SHADED BOXES IN BELOW

Balance Sheet

	LA (Pre)	Oakland	Adjustments	LA (Post)
	Book Value	Fair Value
Current assets	$1,000	$600	N/A	1,000
Fixed assets	$1,800	$800	N/A	1,800
Investment in Oakland	-0-
Total	$2,800
Current debt	$700	$200	N/A	700
Long-term debt	$700	$200	N/A	700
Equity	$1,400
Total	$2,800		N/A

Income Statement

	LA	Oakland	Adjustments	Equity
Revenue	1,500	400	N/A	1,500
COGS	900	270	N/A	900
Depreciation	200	50	N/A	200
Interest Expense	70	40	N/A	70
Income from Oakland			*
Net Income	330	40	N/A

*Take 50% of Oaklands Net Income of 40 and subtract the extra depreciation of $50/5 years. Remember that LA only owns 50% of the company and thus can only claim 50% of the excess depreciation of $50 million. The $50 represents the write up of Fixed Assets.