On January 1, 2017, Meadowlark, Inc. acquired common stock of Lake Corp. At the time of acquisition, the book value and the market value of Lake's net assets were $608 million. During the current year, Lake earned $152 million and declared dividends of $25.6 million. The market value of Lake on December 31, 2017 was $659.2 million. For each scenario below, determine the amount that Meadowlark would report on its balance sheet for its investment in Lake at December 31, 2017; and the amount of income Meadowlark would report for 2017 related to its investment.
a. Scenario 1: Meadowlark, Inc. paid $91.2 million for a 15% interest in Lake and classifies the Lake stock as trading securities.
b. Scenario 2: Meadowlark, Inc. paid $212.8 million for a 35% interest in Lake and uses the equity method to account for the investment.

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The Answer of On January 1, 2017, Meadowlark, Inc. acquired common stock of Lake Corp. At the time of acquisition, the book value and the market value of Lake's net assets were $608 million. During the current year, Lake earned $152 million and declared dividends of $25.6 million. The market value of Lake on December 31, 2017 was $659.2 million. For each scenario below, determine the amount that Meadowlark would report on its balance sheet for its investment in Lake at December 31, 2017; and the amount of income Meadowlark would report for 2017 related to its investment.
a. Scenario 1: Meadowlark, Inc. paid $91.2 million for a 15% interest in Lake and classifies the Lake stock as trading securities.
b. Scenario 2: Meadowlark, Inc. paid $212.8 million for a 35% interest in Lake and uses the equity method to account for the investment.