Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2017 and 2018:Additional Information for 2018 • The parent issued bonds during the year for cash.• Amortization of databases amounts to $15,000 per year.• The parent sold a building with a cost of $80,000 but a $40,000 book value for cash on May 11.• The subsidiary purchased equipment on July 23 for $205,000 in cash.• Late in November, the parent issued stock for cash.• During the year, the subsidiary paid dividends of $10,000. Both parent and subsidiary pay dividends in the same year as declared.Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018. (Use indirect method.) Bolero Company and Consolidated Subsidlary Rivera20172018Revenues ...Cost of goods soldDepreciation and amortizationGain on sale of building..Interest expense..Consolidated net incometo noncontrolling interestto parent company ..$(1,030,000)$ (900,000)610,000650,000120,000(30,000)-0-40,000(150,000)19,00040,000(250,000)21,000$ (131,000)$ (229,000) Bolero Company and Consolidated Subsidlary Rivera20172018Retained earnings, 1/1.Net income...Dividends declared..Retained earnings, 12/31$ (310,000)(131,000)60,000$ (381,000)(229,000)110,000$ (381,000)$ 90,000170,000210,000650,000170,000$ 1,290,000$ (160,000)(410,000)(42,000)(110,000)(187,000)(381,000)$(1,290,000)$ (500,000)$ 180,000CashAccounts receivable..Inventory...Buildings and equipment (net)Databases .150,000360,000710,000155,000Total assets .Accounts payable.Bonds payable. .Noncontrolling interest in RiveraCommon stockAdditional paid-in capital.Retained earnings....$ 1,555,000$ (110,000)(520,000)(61,000)(140,000)(224,000)(500,000)$(1,555,000)Total liabilities and equities.

The workings of the above values are as follows: 1. Accounts receivable decreased 2. Inventory…

Answered: Bolero Company and Consolidated…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2017 and 2018:

Additional Information for 2018

• The parent issued bonds during the year for cash.

• Amortization of databases amounts to $15,000 per year.

• The parent sold a building with a cost of $80,000 but a $40,000 book value for cash on May 11.

• The subsidiary purchased equipment on July 23 for $205,000 in cash.

• Late in November, the parent issued stock for cash.

• During the year, the subsidiary paid dividends of $10,000. 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.)

Bolero Company and Consolidated Subsidlary Rivera
2017
2018
Revenues ...
Cost of goods sold
Depreciation and amortization
Gain on sale of building..
Interest expense..
Consolidated net income
to noncontrolling interest
to parent company ..
$(1,030,000)
$ (900,000)
610,000
650,000
120,000
(30,000)
-0-
40,000
(150,000)
19,000
40,000
(250,000)
21,000
$ (131,000)
$ (229,000)

Bolero Company and Consolidated Subsidlary Rivera
2017
2018
Retained earnings, 1/1.
Net income...
Dividends declared..
Retained earnings, 12/31
$ (310,000)
(131,000)
60,000
$ (381,000)
(229,000)
110,000
$ (381,000)
$ 90,000
170,000
210,000
650,000
170,000
$ 1,290,000
$ (160,000)
(410,000)
(42,000)
(110,000)
(187,000)
(381,000)
$(1,290,000)
$ (500,000)
$ 180,000
Cash
Accounts receivable..
Inventory...
Buildings and equipment (net)
Databases .
150,000
360,000
710,000
155,000
Total assets .
Accounts payable.
Bonds payable. .
Noncontrolling interest in Rivera
Common stock
Additional paid-in capital.
Retained earnings....
$ 1,555,000
$ (110,000)
(520,000)
(61,000)
(140,000)
(224,000)
(500,000)
$(1,555,000)
Total liabilities and equities.

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