Demtex Corporation purchased 60% of Scand Company's outstanding shares on January 14, 2018, for $24,000 more than book value. At that date, the fair value of the non-controlling interest was $16,000 more than 40% of Scand's book value. The full amount of the differential is considered related to patents and is being amortised over an 8-year period. In 2018, Scand purchased a piece of land for $35,000 and later in the year sold it to Demtex for $45,000. Demtex is still holding the land as an investment. During 2020, Demtex bonds with a value of $100,000 were exchanged for equipment valued at $100,000. On January 18 2020, Demtex held inventory purchased previously from Scand for $48,000. During 2020, Demtex purchased an additional $90,000 of goods from Scand and held $54,000 of this inventory on December 31 2020. Scand sells merchandise to the parent at cost plus a 20% markup. Scand also purchases inventory items from Demtex. On January 1* 2020, Scand held inventory it had previously purchased from Demtex for $14,000, and on December 31st 2020, it held goods it had purchased from Demtex for $7,000 during 2020. Scand's total purchases from Demtex in 2020 were $22,000. Demtex sells inventory to Scand at cost plus a 40% markup. The consolidated statement of financial position at December 31, 2020, contained the following amounts: Debit Credit $ Cash 92,000 Accounts Receivable 135,000 Inventory 140,000 Land 75.000 Buildings & Equipment 400,000 Patents 30,000 Accumulated Depreciation 210,000 Accounts Payable 114,200 Bonds Payable 90,000 NCI 84,800 Common Stock 100,000 Retained Earnings 273,000 Totals 872.000 872.000 The following consolidation worksheet was prepared on December 31, 2020. All consolidation entries and adjustments have been entered properly in the worksheet. Demtex accounts for its investment in Scand using the equity method. DEMTEX CORPORATION AND SCAND COMPANY Consolidated Worksheet December 31, 2020 DEMTEX SCAND Consolidation Entries Corporation Company DR CR Consolidated Income Statement Sales 400,000 200,000 90,000 22,000 Less: Cost of Goods Sold 488,000 (287,000) (280,000) (120,000) 8,000 81,000 4,000 20,000 (25,000) (15,000) 5.000 (40.000) (5,000) (65,000) (30,000) (35,000) 19,400 79,400 0 35,000 Less: Depreciation Expense Less: Amortization Expense Less: Other Expense Income from Scand Co. Consolidated Net Income NO in Net Income of Scand Co. Controlling Interest in Net Income Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance 22.400 139,400 13,600 153,000 3,000 116.000 2,000 118,000 91,000 (11,600) 79,400 79,400 35,000 150,000 153,000 273,000 79,400 (50.000) 302.400 150,000 35,000 120.000) 165,000 118,000 20,000 138,000 273,000 79,400 (50,000) 302.400 303,000 Balance Sheet Cash Accounts Receivable Inventory 26,800 80,000 120,000 35,000 40,000 90,000 61.800 120,000 199,000 9,000 2,000 Patent Investment in Subsidiary 130,600 25,000 6,000 4.800 4,000 25,000 0 130.400 15,000 Land Buldings & Equipment Less: Accumulated Depreciation 70,000 340,000 (165,000) 20,000 200,000 (85,000) 10,000 20,000 20.000 80,000 520,000 (230,000) 0 775,800 602,400 300,000 59.800 185,400 Total Assets Accounts Payable Bonds Payable Common Stock Retained Earnings NC in NA of Scand Co. 80,000 120,000 100,000 302.400 15.000 70,000 50,000 165,000 50,000 303,000 4,000 3,200 360,200 95,000 190,000 100,000 302.400 88,400 138,000 85,600 10,000 233,500 Total Liabilities & Equity 602.400 300,000 775,800 Required: (a) Prepare the Worksheet for the consolidated Statement of Cash Flows for 2020 using the indirect method. (5 marks) (b) Prepare a consolidated statement of cash flows for Demtex Corporation and its subsidiary for the year ended December 31, 2020. (10 marks)