Question

Wley Company reports its investment in Wood Corp. under the equity method and recognized income of $20,000 from its investment in Wood Co. during 2010, and received $8,000 in dividends from Wood during the year. The company uses the Indirect method for cash flow from operations. On Wiley's income statement and statement of cash flows Mick all that apply (41) Income statement will show $20,000, and CFO will show $8,000 Income statement will show $20,000, and CFO will show $20,000 Income statement will show $20,000, and CFI will show $12,000 Income statement will show $20,000, and CFI will show $10,000 Income statement will show $10,000, and CFO will show $20,000 Income statement will show $10,000, and CFO will show $10,000 Income statement will show $10,000, and CHI will show $20,000 Income statement will show $10,000, and CFI will show $10,000 CFO will show $20,000 and CFI will show $20,000 CFO will show $20,000 and CAI will show $10,000 CFO will show $10,000 and CFI will show $20,000 CFO will show $10,000 and CH will show $10,000

CFO= cash flow operations
CFI = Cash Flow investing

Answer 1

The Answer is:

Income statement shows $ 20,000 and CFO shows $ 8,000

Explanation:

1) Under equity method, Net income $ 20,000 is adjusted to investment account and disclosed as equity income in income statement and it is not disclosed under Cash flow statement because cash is not involved in that asjustment.

2) If dividend $ 8,000 is received, then such dividend is adjusted to investment account and shown in cash flow under operating activity as cash inflow is involved.

3) So, Remaining options are not correct.