As of December 31, 2014, Graham Holding Company (previous owner of The Washington Post Company) held significant, but not controlling, interest in Residential Home Health Illinois and other companies. These investments totaled $19.8 million on the company’s 2014 balance sheet. In its 2014 annual report, the company included a statement of cash flows, presented in the indirect form, which covered the three-year period of 2014, 2013, and 2012. A line item was included in the operating section of that statement, titled “equity in (earnings) losses of affiliates, . . . net of distributions,” and the dollar amounts for this item for 2014, 2013, and 2012 were $(96.5) million, $1.6 million, and $(1.1) million, respectively.

REQUIRED:
a. Briefly describe the accounting methods used for unconsolidated affiliates, in which a company has a “significant influence.”
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 company reported another line item in the operating section, titled “net (gain) loss on sales of property, plant, and equipment,” which included dollar amounts for 2014, 2013, and 2012 of $(119.4) million, $4.7 million, and $1.9 million, respectively. Describe the transactions that led to these disclosures and explain why the amounts are added or subtracted to net income in the calculation of net cash fl ow from operating activities. Would these amounts appear on any of the other financial statements, and if so, which one?