P4-18

[Based on AICPA] Prepare consolidated statement of cash flows The consolidated workpaper balances of Pop, Inc., and its subsidiary, Son Corporation, as of December 31 are as follows (in thousands):

2016 2015 Net Change Increase (Decrease)

Assets Cash $ 313 $ 195 $118 Marketable equity securities at cost (MES) 175 175 —

Allowance to reduce MES to market (13) (24) (11)

Accounts receivable—net 418 440 (22)

Inventories 595 525 70 Land 385 170 215 Plant and equipment 755 690 65 Accumulated depreciation (199) (145) 54 Patents—net 57 60 (3)

Total assets $2,486 $2,086 $400 ADDITIONAL INFORMATION 1. On January 20, 2016, Pop issued 10,000 shares of its common stock for land having a fair value of $215,000.
2. On February 5, 2016, Pop reissued all of its treasury stock for $44,000.
3. On May 15, 2016, Pop paid a cash dividend of $58,000 on its common stock.
4. On August 8, 2016, equipment was purchased for $127,000 with cash.
5. On September 30, 2016, equipment was sold for $40,000. The equipment cost $62,000 and had a carrying amount of $34,000 on the date of sale.
6. On December 15, 2016, Son Corporation paid a cash dividend of $50,000 on its common stock.
7. Deferred income taxes represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial reporting.
8. Controlling share of net income for 2016 was $198,000. Son’s net income was $110,000.
9. Pop owns 70 percent of its subsidiary, Son Corporation. There was no change in the ownership interest in Son during 2015 and 2016. There were no intercompany transactions other than the dividend paid to Pop by its subsidiary.
10. Assume the marketable equity securities are classified as trading securities.
REQuIRED: Prepare a consolidated statement of cash flows for Pop and Subsidiary for the year ended December 31, 2016. Use the indirect method.