Question
2. Loki Corporation acquired 80 percent ownership of Goose Company on January 1, 20X6, at underlying book value. At that date, the fair value of
2. Loki Corporation acquired 80 percent ownership of Goose Company on January 1, 20X6, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Goose Company. Consolidated balance sheets at January 1, 20X8, and December 31, 20X8, are as follows:
Item | Jan 1, 20X8 | Dec 31, 20X8 | ||||||||||
Cash | $ | 50,000 | $ | 80,000 | ||||||||
Accounts Receivable | 75,000 | 90,000 | ||||||||||
Inventory | 85,000 | 100,000 | ||||||||||
Land | 60,000 | 80,000 | ||||||||||
Buildings and Equipment | 300,000 | 350,000 | ||||||||||
Less: Accumulated Depreciation | (90,000 | ) | (120,000 | ) | ||||||||
Patents | 12,000 | 10,000 | ||||||||||
Total Assets | $ | 492,000 | $ | 590,000 | ||||||||
Accounts Payable | $ | 40,000 | $ | 58,000 | ||||||||
Wages Payable | 20,000 | 16,000 | ||||||||||
Notes Payable | 150,000 | 175,000 | ||||||||||
Common Stock ($5 par value) | 100,000 | 100,000 | ||||||||||
Retained Earnings | 162,000 | 218,000 | ||||||||||
Noncontrolling Interest | 20,000 | 23,000 | ||||||||||
Total Liabilities and Equities | $ | 492,000 | $ | 590,000 |
The consolidated income statement for 20X8 contained the following amounts:
Sales | $ | 400,000 | |||||
Cost of Goods Sold | $ | 172,000 | |||||
Wage Expense | 45,000 | ||||||
Depreciation Expense | 30,000 | ||||||
Interest Expense | 12,000 | ||||||
Amortization Expense | 2,000 | ||||||
Other Expenses | 52,000 | (313,000 | ) | ||||
Consolidated Net Income | $ | 87,000 | |||||
Income to Noncontrolling Interest | (6,000 | ) | |||||
Income to Controlling Interest | $ | 81,000 |
Loki and Goose paid dividends of $25,000 and $15,000, respectively, in 20X8.
Required:
1) Prepare a worksheet to develop a consolidated statement of cash flows for 20X8 using the indirect method of computing cash flows from operations. (8 points)
2) Prepare a consolidated statement of cash flows for 20X8. (12 points)
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