Effect of transactions involving the equity method on the statement of cash flows. Refer to the preceding exercise and use those instructions for the following items.

a. A 40-percent-owned affiliate accounted for using the equity method earns $25,000 and pays dividends of $10,000.

b. A 40-percent-owned affiliate accounted for using the equity method reports a loss for the year of $12,500.

c. A firm amortizes $3,000 of the excess of the purchase price over the book value of the underlying net assets in a 40-percent-owned affiliate. The excess related to a patent.