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Consider the following data reported in the accounts of a parent company and its 80-percent-owned subsidiary: Net income Depreciation expense Amortization expense Dividends paid in cash Income from equity method investments Cash dividends received from equity investments Items appearing in eliminating entries: Revaluation write-offs: Depreciation expense. Amortization expense $3,000 15.000 40,000 Parent Subsidiary $1,000,000 (1) $240,000 175,000 38.000 50,000 250,000 75,000 60.000 35,000 Goodwill impairment loss (1) Parent's separate income only; does not include equity in net income of subsidiary. Required a. Calculate consolidated net income. b. Prepare the cash from operating activities section of the consolidated statement of cash flows, starting with consolidated net income, using the indirect method. Assume no adjustment is required for changes in consolidated current asset and current liability accounts. Use a negative sign with answers to indicate a decrease/reduction cash. Consolidated Statement of Cash Flows Cash from operating activities section Consolidated net income Consolidated depreciation expense Consolidated amortization expense Goodwill impairment loss Cash from operating activities

Consider the following data reported in the accounts of a parent company and its 80-percent-owned subsidiary: Net income Depreciation expense Amortization expense Dividends paid in cash Income from equity method investments Cash dividends received from equity investments Items appearing in eliminating entries: Revaluation write-offs: Depreciation expense. Amortization expense $3,000 15.000 40,000 Parent Subsidiary $1,000,000 (1) $240,000 175,000 38.000 50,000 250,000 75,000 60.000 35,000 Goodwill impairment loss (1) Parent's separate income only; does not include equity in net income of subsidiary. Required a. Calculate consolidated net income. b. Prepare the cash from operating activities section of the consolidated statement of cash flows, starting with consolidated net income, using the indirect method. Assume no adjustment is required for changes in consolidated current asset and current liability accounts. Use a negative sign with answers to indicate a decrease/reduction cash. Consolidated Statement of Cash Flows Cash from operating activities section Consolidated net income Consolidated depreciation expense Consolidated amortization expense Goodwill impairment loss Cash from operating activities

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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am. 115.

Consolidated Cash from Operations Consider the following data reported in the accounts of a parent company and its 80-percent-owned subsidiary: Net income Depreciation expense Amortization expense Parent $1,000,000 (1) $240,000 Subsidiary 175,000 38.000 50,000 Dividends paid in cash 250,000 75,000 Income from equity method investments Cash dividends received from equity investments 60.000 35,000 Items appearing in eliminating entries: Revaluation write-offs: Depreciation expense. Amortization expense $3,000 15,000 40,000 Goodwill impairment loss (1) Parent's separate income only; does not include equity in net income of subsidiary. Required a. Calculate consolidated net income. $ b. Prepare the cash from operating activities section of the consolidated statement of cash flows, starting with consolidated net income, using the indirect method. Assume no adjustment is required for changes in consolidated current asset and current liability accounts. Use a negative sign with answers to indicate a decrease/reduction cash. Consolidated Statement of Cash Flows Cash from operating activities section Consolidated net income Consolidated depreciation expense Consolidated amortization expense Goodwill impairment loss Cash from operating activities = $
Transcribed Image Text:Consolidated Cash from Operations Consider the following data reported in the accounts of a parent company and its 80-percent-owned subsidiary: Net income Depreciation expense Amortization expense Parent $1,000,000 (1) $240,000 Subsidiary 175,000 38.000 50,000 Dividends paid in cash 250,000 75,000 Income from equity method investments Cash dividends received from equity investments 60.000 35,000 Items appearing in eliminating entries: Revaluation write-offs: Depreciation expense. Amortization expense $3,000 15,000 40,000 Goodwill impairment loss (1) Parent's separate income only; does not include equity in net income of subsidiary. Required a. Calculate consolidated net income. $ b. Prepare the cash from operating activities section of the consolidated statement of cash flows, starting with consolidated net income, using the indirect method. Assume no adjustment is required for changes in consolidated current asset and current liability accounts. Use a negative sign with answers to indicate a decrease/reduction cash. Consolidated Statement of Cash Flows Cash from operating activities section Consolidated net income Consolidated depreciation expense Consolidated amortization expense Goodwill impairment loss Cash from operating activities = $
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