Alford Company and its 80 percent-owned subsidiary. Knight, have the following income statements for 2021: Alford $ (500,000) 300,000 40,000 Knight $ (230,000) 140,000 10,000 20,000 20,000 Revenues Cost of goods sold Depreciation and amortization Other expenses Gain on sale of equipment. Equity in earnings of Knight Net income (30,000) (36,200) $ (206,200) e 0 $ (60,000) Additional Information for 2021 • Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to Knight. • Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31, they are $9,000. . Annual excess amortization expense resulting from the acquisition is $11,000. . Knight paid dividends totaling $20,000. • The noncontrolling interest's share of the subsidiary's income is $9,800. . During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively.
Alford Company and its 80 percent-owned subsidiary. Knight, have the following income statements for 2021: Alford $ (500,000) 300,000 40,000 Knight $ (230,000) 140,000 10,000 20,000 20,000 Revenues Cost of goods sold Depreciation and amortization Other expenses Gain on sale of equipment. Equity in earnings of Knight Net income (30,000) (36,200) $ (206,200) e 0 $ (60,000) Additional Information for 2021 • Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to Knight. • Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31, they are $9,000. . Annual excess amortization expense resulting from the acquisition is $11,000. . Knight paid dividends totaling $20,000. • The noncontrolling interest's share of the subsidiary's income is $9,800. . During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Alford Company and its 80 percent-owned subsidiary, Knight, have the following income statements for 2021:
Alford
$ (500,000)
300,000
40,000
20,000
(30,000)
(36,200)
$ (206,200)
Revenues
Cost of goods sold
Depreciation and amortization
Other expenses
Gain on sale of equipment
Equity in earnings of Knight
Net income
Knight
$ (230,000)
140,000
10,000
20,000
e
e
$ (60,000)
Additional Information for 2021
• Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to
Knight.
• Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31, they are $9,000.
.
• Annual excess amortization expense resulting from the acquisition is $11,000.
. Knight paid dividends totaling $20,000.
• The noncontrolling interest's share of the subsidiary's income is $9,800.
. During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000
and $6,000, respectively.
Transcribed Image Text:Additional Information for 2021
• Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to
Knight.
Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31, they are $9,000.
• Annual excess amortization expense resulting from the acquisition is $11,000.
• Knight paid dividends totaling $20,000
• The noncontrolling interest's share of the subsidiary's income is $9,800.
. During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000
and $6,000, respectively.
Using either the direct or indirect method, compute net cash flows from operating activities during the period for the business
combination.
Not cash flows from operating activities
4
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