P8-12 Consolidated statement of cash flows–indirect method (sale of an interest)

Comparative consolidated financial statements for Pop Corporation and its subsidiary, Son Corporation, at and for the years ended December 31, 2017 and 2016 follow (in thousands).

Pop Corporation and Subsidiary Comparative Consolidated Financial Statements At and For the Years Ended December 31, 2017 and 2016 Year 2017 Year 2016 Year’s Change 2017–2016 Income Statement Sales $3,050.0 $2,850.0 $ 200.0 Gain on 10% interest 5.7 — 5.7 Cost of sales (1,750.7) (1,690.0) 60.7 Depreciation expense (528.0) (508.0) 20.0 Other expenses (455.0) (392.0) 63.0 Noncontrolling interest share (22.0) (10.0) 12.0 Net income $ 300.0 $250.0 $ 50.0 Retained Earnings Statement Retained earnings—beginning $1,000.0 $ 950.0 $50.0 Net income 300.0 250.0 50.0 Dividends (200.0) (200.0) —

Retained earnings—ending $1,100.0 $1,000.0 $ 100.0 Balance Sheet Cash $ 46.5 $50.5 $(4.0)

Accounts receivable—net 87.5 90.0 (2.5)

Inventories 377.5 247.5 130.0 Prepaid expenses 68.0 88.0 (20.0)

Equipment 2,970.0 2,880.0 90.0 Accumulated depreciation (1,542.0) (1,044.0) 498.0 Land and buildings 960.0 960.0 —

Accumulated depreciation (300.0) (272.0) 28.0 Total assets $2,667.5 $3,000.0 $(332.5)

Accounts payable $ 140.0 $ 343.5 $(203.5)

Dividends payable 52.5 52.5 —

Long-term notes payable 245.0 545.0 (300.0)

Capital stock, $10 par 1,000.0 1,000.0 —

Retained earnings 1,100.0 1,000.0 100.0 Noncontrolling interest 130.0 59.0 71.0 Total equities $2,667.5 $3,000.0 $(332.5)

REQuIRED: Prepare a consolidated statement of cash flows for the year ended December 31, 2017. The changes in equipment are due to a $100,000 equipment acquisition for cash, current depreciation, and the sale of one-ninth of the fair value/book value differential allocated to equipment ($10,000) and related accumulated depreciation ($2,000). This reduction in the unamortized fair value/book value differential results from selling a 10 percent interest in Son for $72,700 and thereby reducing its interest from 90 percent to 80 percent. Son’s net income and dividends for 2017 were $110,000 and $50,000, respectively. Dividends were declared and paid on December 31. Use the indirect method.