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 10 months agoRelated Solutions
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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
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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...
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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
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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,
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Total Equity 600,000
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for
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Drew
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per share.
Instructions
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for 2012, assuming Tuecke cannot exercise...
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