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This investment by the equity method.

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Reference no: EM13881549

1.On January 1, 2013, 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 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, 2013, was $150 million. During 2013, Lake declared and paid cash dividends of $30 million. The buildings have a remaining life of 10 years.

Required:
1. Prepare all appropriate journal entries related to the investment during 2013, assuming Cameron accounts for this investment by the equity method.
2. Determine the amounts to be reported by Cameron:
a. As an investment in Cameron's 2013 balance sheet.
b. As investment revenue in the income statement.
c. Among investing activities in the statement of cash flows.

Reference no: EM13881549

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