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ABC Company holds 80 percent ownership of XYZ Company. The consolidated balance sheets as of December 31, 2013, and December 31, 2014, are as follows: Dec. 31, 2013 Dec. 31, 2014 Cash Accounts Receivable Inventory Land $ 83,000 210,000 320,000 190,000 850,000 (280,000) 40,000 $ 181,000 175,000 370,000 160,000 980,000 (325,000) 28,000 Buildings & Equipment Less: Accumulated Depreciation Goodwill Total Assets $1,413,000 Ś 52 000 $1,569,000 Accounts Pavable S 74 000

ABC Company holds 80 percent ownership of XYZ Company. The consolidated balance sheets as of December 31, 2013, and December 31, 2014, are as follows: Dec. 31, 2013 Dec. 31, 2014 Cash Accounts Receivable Inventory Land $ 83,000 210,000 320,000 190,000 850,000 (280,000) 40,000 $ 181,000 175,000 370,000 160,000 980,000 (325,000) 28,000 Buildings & Equipment Less: Accumulated Depreciation Goodwill Total Assets $1,413,000 Ś 52 000 $1,569,000 Accounts Pavable S 74 000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Company holds 80 percent ownership of XYZ Company. The consolidated balance sheets as of December 31, 2013, and December 31, 2014, are as follows: Dec. 31, 2014 $ 181,000 175,000 370,000 160,000 980,000 (325,000) 28,000 Dec. 31, 2013 $ 83,000 210,000 320,000 190,000 850,000 (280,000) 40,000 Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Goodwill Total Assets $1,413,000 $ 52,000 45,000 400,000 18,000 40,000 300,000 70,000 488,000 $1,569,000 $ 74,000 30,000 500,000 16,000 44,000 300,000 70,000 535,000 Accounts Payable Interest Payable Bonds Payable Bond Premium Noncontrolling Interest Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Owners' Equity $1,413,000 $1,569,000 The 2014 consolidated income statement contained the following amounts: Sales Cost of Goods Sold Depreciation Expense Interest Expense $600,000 $375,000 45,000 69,000 Loss on Sale of Land 20,000 Goodwill Impairment Loss (521,000) $ 79,000 (7,000) 12,000 Consolidated Net Income Income to Noncontrolling Interest Income to Controlling Interest $ 72,000 ABC acquired its investment in XYZ on January 1, 2012, for $176,000. At that date, the fair value of the noncontrolling interest was $44,000, and XYZ reported net assets of $150,000. A total of $40,000 of the excess price over fair value was assigned to goodwill. The remainder of the excess price over fair value was assigned to equipment with a remaining life of 20 years from the date of combination. ABC sold $100,000 of bonds on December 31, 2014, to assist in generating additional funds. XYZ reported net income of $35,000 for 2014 and paid dividends of $15,000. ABC reported 2014 equity-method net income of $80,000 and paid dividends of $25,000. Required Prepare a consolidated statement of cash flows for 2014 using the indirect method.
Transcribed Image Text:ABC Company holds 80 percent ownership of XYZ Company. The consolidated balance sheets as of December 31, 2013, and December 31, 2014, are as follows: Dec. 31, 2014 $ 181,000 175,000 370,000 160,000 980,000 (325,000) 28,000 Dec. 31, 2013 $ 83,000 210,000 320,000 190,000 850,000 (280,000) 40,000 Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Goodwill Total Assets $1,413,000 $ 52,000 45,000 400,000 18,000 40,000 300,000 70,000 488,000 $1,569,000 $ 74,000 30,000 500,000 16,000 44,000 300,000 70,000 535,000 Accounts Payable Interest Payable Bonds Payable Bond Premium Noncontrolling Interest Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Owners' Equity $1,413,000 $1,569,000 The 2014 consolidated income statement contained the following amounts: Sales Cost of Goods Sold Depreciation Expense Interest Expense $600,000 $375,000 45,000 69,000 Loss on Sale of Land 20,000 Goodwill Impairment Loss (521,000) $ 79,000 (7,000) 12,000 Consolidated Net Income Income to Noncontrolling Interest Income to Controlling Interest $ 72,000 ABC acquired its investment in XYZ on January 1, 2012, for $176,000. At that date, the fair value of the noncontrolling interest was $44,000, and XYZ reported net assets of $150,000. A total of $40,000 of the excess price over fair value was assigned to goodwill. The remainder of the excess price over fair value was assigned to equipment with a remaining life of 20 years from the date of combination. ABC sold $100,000 of bonds on December 31, 2014, to assist in generating additional funds. XYZ reported net income of $35,000 for 2014 and paid dividends of $15,000. ABC reported 2014 equity-method net income of $80,000 and paid dividends of $25,000. Required Prepare a consolidated statement of cash flows for 2014 using the indirect method.
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