Question
Suppose that Chuckie Cheese acquired 33.33% (one-third) of Toys R US from an unrelated third party for $80 million on October 1, 2012. At the
Suppose that Chuckie Cheese acquired 33.33% (one-third) of Toys R US from an unrelated
third party for $80 million on October 1, 2012. At the acquisition date, the total book value of Toys R US's shareholders' equity was $240 million. Both have September 30 fiscal year ends. For the fiscal year ended September 30, 2013, Toys R US earned a total net income of $70 million and paid total dividends of $20 million.
What will be the effect of the Toys R US investment on Chuckie Cheese's cash flow statement for the year ended September 30, 2013? Identify all of the line items (and their amounts) that you might expect to be affected.
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