Consolidated Statement of Cash Flows
Traper Company holds 80 percent ownership of Arrow Company. The consolidated balance sheets as of December 31, 20X3, and December 31, 20X4, are as follows:
| Dec. 31, 20X3 | Dec. 31, 20X4 |
Cash | $ 83,000 | $ 181,000 |
Accounts Receivable | 210,000 | 175,000 |
Inventory | 320,000 | 370,000 |
Land | 190,000 | 160,000 |
Buildings and Equipment | 850,000 | 980,000 |
Less: Accumulated Depreciation | (280,000) | (325,000) |
Goodwill | 40,000 | 28,000 |
Total Assets | $1,413,000 | $1,569,000 |
Accounts Payable | $ 52,000 | $ 74,000 |
Interest Payable | 45,000 | 30,000 |
Bonds Payable | 400,000 | 500,000 |
Bond Premium | 18,000 | 16,000 |
Noncontrolling Interest | 40,000 | 44,000 |
Common Stock | 300,000 | 300,000 |
Additional Paid-In Capital | 70,000 | 70,000 |
Retained Earnings | 488,000 | 535,000 |
Total Liabilities and Owners’ Equity | $1,413,000 | $1,569,000 |
The 20X4 consolidated income statement contained the following amounts:
Sales |
| $600,000 |
Cost of Goods Sold | $375,000 |
|
Depreciation Expense | 45,000 |
|
Interest Expense | 69,000 |
|
Loss on Sale of Land | 20,000 |
|
Goodwill Impairment Loss | 12,000 | (521,000) |
Consolidated Net Income |
| $ 79,000 |
Income to Noncontrolling Interest |
| (7,000) |
Income to Controlling Interest |
| $ 72,000 |
Traper acquired its investment in Arrow on January 1, 20X2, for $176,000. At that date, the fair value of the noncontrolling interest was $44,000, and Arrow reported net assets of $150,000. A total of $40,000 of the differential was assigned to goodwill. The remainder of the differential was assigned to equipment with a remaining life of 20 years from the date of combination.
Traper sold $100,000 of bonds on December 31, 20X4, to assist in generating additional funds. Arrow reported net income of $35,000 for 20X4 and paid dividends of $15,000. Traper reported 20X4 equity-method net income of $80,000 and paid dividends of $25,000.
Required
a.Prepare a worksheet to develop a consolidated statement of cash flows for 20X4 using the indirect method of computing cash flows from operations.
b.Prepare a consolidated statement of cash flows for 20X4.
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