n January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $600 million cash. Wolfe’s net income for the year ended December 31, 2021, was $300 million. During 2021, Wolfe declared and paid cash dividends of $60 million. Beilich recorded the investment as follows: ($ in millions)Purchase Investment in Wolfe Construction shares600 Cash 600 Net income Investment in Wolfe Construction shares (20% x $300 million)60 Investment revenue 60 Dividends Cash (20% × $60 million)12 Investment in Wolfe Construction shares. 12 Required:What would be the pretax amounts related to the investment that Beilich would report in its statement of cash flows for the year ended December 31, 2021? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated by a minus sign.)

The cash flow statement (CFS), sometimes known as the statement of cash flows, is a financial…

Answered: January 1, 2021, Beilich Enterprises…

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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n January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $600 million cash. Wolfe’s net income for the year ended December 31, 2021, was $300 million. During 2021, Wolfe declared and paid cash dividends of $60 million. Beilich recorded the investment as follows:

	($ in millions)
Purchase
Investment in Wolfe Construction shares	600
Cash		600

Net income
Investment in Wolfe Construction shares (20% x $300 million)	60
Investment revenue		60

Dividends
Cash (20% × $60 million)	12
Investment in Wolfe Construction shares.		12

Required:
What would be the pretax amounts related to the investment that Beilich would report in its statement of cash flows for the year ended December 31, 2021? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated by a minus sign.)

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