11-52 Effect of Transactions Under the Equity Method

Ford Motor Companys 2011 financial statements revealed that it has extensive equity method investments. In total, the balance sheet showed equity investments of $2,569 million at December 31, 2010, and $2,936 million at December 31, 2011. During 2011 Ford included equity income of $500 million in its income statement, and footnote 11 indicates that approximately $316 million in dividends was received from equity investees.

Compute the approximate change in Fords equity investment asset that cannot be explained by either increases (decreases) due to its share in earnings (losses) or decreases due to dividends received. You may find a T-account will help your analysis.

Ford uses the indirect method to construct its cash flow statement. Indicate how these transactions with equity investees would be shown in the statement of cash flows.