Question
In: Accounting
On January 1, 2016, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...
- 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 Lake’s 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. Cameron’s investment in Lake will affect Cameron’s 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.
** please show all the works **
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On January 1, 2018, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 20% of the outstanding
common stock of Lake Construction Company for $360 million cash. At
the date of acquisition of the stock, Lake's net assets had a fair
value of $800 million. Their 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,
2018, was...
On January 1, 2018, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 20% of the outstanding
common stock of Lake Construction Company for $340 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 $850 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,
2018, was...
On January 1, 2018, Cameron Inc. bought 10% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 10% of the outstanding
common stock of Lake Construction Company for $170 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. Lake’s net income for the year ended December 31,
2018, was...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding
common stock of Lake Construction Company for $600 million cash. At
the date of acquisition of the stock, Lake's net assets had a fair
value of $800 million. Their 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,
2018, was...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding
common stock of Lake Construction Company for $420 million cash. At
the date of acquisition of the stock, Lake's net assets had a fair
value of $800 million. Their 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,
2018, was...
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life was undervalued on Ali's financial records by $46,000. Hamza
also owned an unrecorded customer list with an assessed fair value
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Ali Co. earned reported net income of $180,000 in 2016 and
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LINK Inc.'s accounting records showed a net book value on that
date of $600,000:
Common Stock 200,000
Retained Earnings 400,000
Total Equity 600,000
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total assets of $4,095,000 with liabilities of $935,000. Any excess
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Tuecke Concrete acquired 20% of the outstanding common stock of Drew, Inc. on January 1,2012, by...
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for
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cash dividend on June 30 and again on December 31, 2012.
Drew
reported a net income of $600,000 for the year. On
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per share.
Instructions
(a) Prepare the journal entries for Tuecke's Concrete
for 2012, assuming Tuecke cannot exercise...
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