-Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.

On January 1, 2011, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 10 percent payable every December 31. Cairns acquired 45 percent of these bonds at 92 percent of face value on January 1, 2013. Both companies utilize the straight-line method of amortization.

Prepare entry B for DEC 31-2013-2014and 2015

2-

Albuquerque, Inc., acquired 18,000 shares of Marmon Company several years ago for $710,000. At the acquisition date, Marmon reported a book value of $700,000, and Albuquerque assessed the fair value of the noncontrolling interest at $60,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.

At the present time, Marmon reports $850,000 as total stockholders equity, which is broken down as follows:

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Problem 6-45 (LO 6-4)

Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 30 percent of this subsidiarys convertible bonds. The following consolidated financial statements are for 2014 and 2015:

Bolero Company and Consolidated Subsidiary Rivera
	2014	2015
Revenues		$	(930,000)			$	(1,060,000)
Cost of goods sold			616,000				656,000
Depreciation and amortization			106,000				132,000
Gain on sale of building			0				(36,000)
Interest expense			46,000				46,000
Consolidated net income			(162,000)				(262,000)
to noncontrolling interest			25,000				27,000
to parent company		$	(137,000)			$	(235,000)
Retained earnings, 1/1		$	(316,000)			$	(387,000)
Net income			(137,000)				(235,000)
Dividends declared			66,000				116,000
Retained earnings, 12/31		$	(387,000)			$	(506,000)
Cash		$	96,000			$	192,000
Accounts receivable			182,000				156,000
Inventory			216,000				372,000
Buildings and equipment (net)			656,000				722,000
Databases			182,000				161,000
Total assets		$	1,332,000			$	1,603,000
Accounts payable		$	(172,000)			$	(116,000)
Bonds payable			(416,000)				(532,000)
Noncontrolling interest in Rivera			(48,000)				(67,000)
Common stock			(116,000)				(146,000)
Additional paid-in capital			(193,000)				(236,000)
Retained earnings			(387,000)				(506,000)
Total liabilities and equities		$	(1,332,000)			$	(1,603,000)

Additional Information for 2015

	The parent issued bonds during the year for cash.
	Amortization of databases amounts to $21,000 per year.
	The parent sold a building with a cost of $92,000 but a $46,000 book value for cash on May 11.
	The subsidiary purchased equipment on July 23 for $239,000 in cash.
	Late in November, the parent issued stock for cash.
	During the year, the subsidiary paid dividends of $10,000. 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, 2015. (Use indirect method)