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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
am. 115.
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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