Where do you start? GW is $100 million I think, oh wait no the fair value above book was attributable to identifiable assets so does that mean it's amortized or does it remain indefinitely? Then there's the dividends, but why are you using the equity method when you only bought 20%? Shouldn't that be cost method? I don't remember hardly any of this stuff.
I still need to pass FAR.
FML...
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 the 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.
Prepare all appropriate journal entries related to the investment during 2013, assuming Cameron accounts for this investment by the equity method.
Determine the accounts to be reported by Cameron:
1. As an investment in Cameron's 2013 balance sheet.
2. As investment revenue in the income statement
3, Among investing activities in the statement of cash flows.
