As of January 3, 2010. The Washington Post Company held significant, but not controlling, interest in Bowater Mercy Paper Company and other companies. These investments totaled $54.7 million on the company’s 2009 balance sheet. In its 2009 annual report, The Washington Post Company included a statement of cash flows, presented in the indirect form, which covered the three-year period of 2009, 2008, and 2007. A line item was included in the operating section of that statement, titled “equity in losses of affiliates, net of distributions,” and the dollar amounts for this item for 2009, 2008, and 2007 were $30.1 million, $9.1 million, and $(3.8) million, respectively.
Required
(a) Briefly describe the accounting methods used for unconsolidated affiliates, in which a company has a “significant influence” (For a review, see the equity method in Chapter 8.)
(b) Explain why the dollar amounts were added to net income on the statement of cash flows.
(c) What does the phrase “net of distributions” mean?
(d) On the same statement of cash flows, The Washington Post Company reported another line item in the operating section, titled “net loss on sale or write-down of property, plant, and equipment,” which included dollar amounts for 2009, 2008, and 2007 of $19.7 million, $4.5 million, and $3.1 million, respectively. Describe the transactions that led to these disclosures and explain why the three-dollar amounts are added to net income in the calculation of net cash flow from operating activities. Would these amounts appear on any of the other financial statements, and if so, which one?