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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

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 & 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 & 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.

Jul 09 2020 Read more Less More

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