Problem

Comparative consolidated financial statements for Pop Corporation and its subsidiary, Sat...

Comparative consolidated financial statements for Pop Corporation and its subsidiary, Sat Corporation, at and for the years ended December 31, 2012 and 2011 follow (in thousands).

Pop Corporation and Subsidiary Comparative Consolidated Financial Statements At and For the Years Ended December 31, 2012 and 2011

 

Year 2012

Year 2011

Year’s Change 2012–2011

Income Statement

Sales

$3,050.0

$2,850.0

$ 200.0

Gain on 10% interest

5.7

5.7

Cost of sales

(1,750.7)

(1,690.0)

(60.7)

Depreciation expense

(528.0)

(508.0)

(20.0)

Other expenses

(455.0)

(392.0)

(63.0)

Noncontrolling interest share

(22.0)

(10.0)

(12.0)

Net income

$ 300.0

$ 250.0

$ 50.0

Retained Earnings Statement

Retained earnings—beginning

$1,000.0

$ 950.0

$ 50.0

Net income

300.0

250.0

50.0

Dividends

(200.0)

(200.0)

Retained earnings—ending

$1,100.0

$1,000.0

$ 100.0

Balance Sheet

Cash

$ 46.5

$ 50.5

$ (4.0)

Accounts receivable—net

87.5

90.0

(2.5)

Inventories

377.5

247.5

130.0

Prepaid expenses

68.0

88.0

(20.0)

Equipment

2,970.0

2,880.0

90.0

Accumulated depreciation

(1,542.0)

(1,044.0)

(498.0)

Land and buildings

960.0

960.0

Accumulated depreciation

(300.0)

(272.0)

(28.0)

Total assets

$2,667.5

$3,000.0

$(332.5)

Accounts payable

$ 140.0

$ 343.5

$(203.5)

Dividends payable

52.5

52.5

Long-term notes payable

245.0

545.0

(300.0)

Capital stock, $10 par

1,000.0

1,000.0

Retained earnings

1,100.0

1,000.0

100.0

Noncontrolling interest

130.0

59.0

71.0

Total equities

$2,667.5

$3,000.0

$(332.5)

REQUIRED: Prepare a consolidated statement of cash flows for the year ended December 31, 2012. The changes in equipment are due to a $100,000 equipment acquisition for cash, current depreciation, and the sale of one-ninth of the fair value/book value differential allocated to equipment ($10,000) and related accumulated depreciation ($2,000). This reduction in the unamortized fair value/book value differential results from selling a 10 percent interest in Sat for $72,700 and thereby reducing its interest from 90 percent to 80 percent. Sat’s net income and dividends for 2012 were $110,000 and $50,000, respectively. Use the indirect method.

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