Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiarys convertible bonds. The following consolidated financial statements are for 2017 and 2018:
Problem 6-47 (LO 6-5) Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary's convertible bonds. The following consolidated financial statements are for 2017 and 2018: 2017 2018 (865,000) 603,000 93,000 (995,000) 643,000 106,000 Revenues Cost of goods sold Depreciation and am0rtization Gain on sale of building Interest expense Consolidated net income (23,000) 33,000 33,000 (136,000) 12,000 (236,000) 14,000 to noncontrolling interest (124,000) (222,000) to parent company (303,000) (124,000) 53,000 Retained earnings, 1/1 Net income 374,000) (222,000) Dividends declared 103,000 (374,000) (493,000) Retained earnings, 12/31 Cash 83,000 156,000 203,000 643,000 156,000 143,000 346,000 699,000 Accounts receivable Inventory Buildings and equipment (net) Databases 156,000 148,000 1,241,000 1,492,000 Total assets Accounts payable Bonds payable (143,000) (403,000) (35,000) (106,000) (180,000) (106,000) (506,000) (44,000) (133,000) (210,000) Noncontrolling interest in Rivera Common stock Additional paid-in capital Retained earnings (374,000) (493,000) (1,241,000) (1,492,000) Total liabilities and equities Additional Information for 2018 The parent issued bonds during the year for cash. Amortization of databases amounts to $8,000 per year The parent sold a building with a cost of $66,000 but a $33,000 book value for cash on May 11. The subsidiary purchased equipment on July 23 for $187,000 in cash Late in November, the parent issued stock for cash. During the year, the subsidiary paid dividends of $25,000. Both parent and subsidiary pay dividends in the same year as declared Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018. (Use indirect method) (Negative amounts and amounts to be deducted should be indicated by a minus sign.) Answer is complete but not entirely correct. BOLERO COMPANY AND CONSOLIDATED SUBSIDIARY RIVERA Consolidated Statement of Cash Flows Year Ending December 31, 2018 Cash from operating activities: $ 236,000 Consolidated net income Adjustment from accrual to cash: Depreciation and amortization 106,000 Decrease in accounts receivable 13,000 Increase in inventory (143,000) Decrease in accounts payable (37,000) Gain on sale of building (23,000) Net cash flow from operating activities S 152,000 Cash flows from investing activities Sale of building 56,000 Purchase of equipment (187,000) Net cash flow from investing activities (131,000) Cash flows from financing activities: Dividends declared 111,000 106,000 Issuance of bonds 32,000 Issuance of common stock 73,000 Net cash flow from financing activities 322,000 Net increase in cash during 2018 Cash, January 1, 2018 343,000 83,000 S 426,000 Cash, December 31, 2018
