Question
P Corporation acquired 80 percent ownership of S Company on January 1, 20X6, at underlying book value. At that date, the fair value of the
P Corporation acquired 80 percent ownership of S 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 S 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 & 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 | 100,000 | 100,000 |
Retained Earnings | 162,000 | 218,000 |
Noncontrolling Interest | 20,000 | 23,000 |
Total Liabilites & Equity | 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 |
P and S paid dividends of $25,000 and $15,000, respectively, in 20X8.
Prepare a worksheet to develop a consolidated statement of cash flows for 20X8 using the indirect method of computing cash flows from operations.
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