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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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