2017 2018 $ (965, 000) 623,000 113,000 $ (1,095,000) 663,000 146, 000 (43, 000)

Question

2017 2018 $ (965, 000) 623,000 113,000 $ (1,095,000) 663,000 146, 000 (43, 000) Revenues Cost of goods sold Depreciation and amortization Gain on sale of buildin Interest expense Consolidated net income to noncontrolling interest to parent company Retained earnings, 1/1 Net income Dividends declared 53,000 53,000 (176,000) 32,000 $ (144,000) (276,000) 34,000 $ (242,000) $ (394,000) (242,000) S (323,000) (144,000) 73,000 123,000 $ (513,000) $ 206,000 163,000 386, 000 749,000 168,000 $ 1,672,000 $ (136,000) (546, 000) (74,000) (153, 000) (250,000) (513,000) $ (1,672,000) $ (394,000) Retained earnings, 12/31 Cash Accounts receivable Inventory Buildings and equipment (net) Databases Total assets Accounts payable Bonds pavable Noncontrolling interest in Rivera Common stock Additional paid-in capital Retained earnings Total liabilities and equities $ 103,000 196, 000 223,000 663,000 196,000 $ 1,381,000 S (165, 000) (423,000) (55, 000) (144,000) (200,000) (394,000) $ (1,381,000) Additional Information for 2018 The parent issued bonds during the year for cash Amortization of databases amounts to $28,000 per year The parent sold a building with a cost of $106,000 but a $53,000 book value for cash on May 11 The subsidiary purchased equipment on July 23 for $257,000 in cash Late in November, the parent issued stock for cash During the year, the subsidiary paid dividends of $50,000. Both parent and subsidiary pay dividends in the same year as declared Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018. (Use indirect method) (Negative amounts and amounts to be deducted should be indicated by a minus sign.)

Explanation / Answer

Cash flow indirect method Cash flow from operating activities Net income 242000 Adjustments to reconcile the net income Gain on sale of building -43000 Depreciation expense 146000 Changes in current asset and liabilities decrease in accounts receivable 33000 Increase in Inventory -163000 decrease in accounts payable -29000 -56000 Cash flow from operating activities 186000 Cash flow from Investing activities Building sold 96000 Building purchased -257000 Cash flow from Investing activities -161000 Cash flow from Financing activities Bonds payable 123000 Common stock 9000 Additional paid in capital 50000 Dividend paid -123000 Non controlling interest 19000 Cash flow from Financing activities 78000 Net Cash and cash equivalent 103000 Add Beginning cash and cash equivalent 103000 Ending cash and cash equivalent 206000

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