Parento Inc. owns 80% of Santana Corp. The consolidated financial statements of Parento follow: PARENTO INC. CONSOLIDATED BALANCE SHEET At December 31, Year 4 Cash Accounts receivable Inventory Land Buildings and equipment Accumulated depreciation Databases Accounts payable Accrued liabilities Bonds payable Bond premium Common shares Retained earnings Non-controlling interest Sales Year 4 $ 127,620 Year 3 $ 55,200 115,500 137,200 329,000 214,000 120,000 193,000 796,000 700,000 (278,700) (235,200) 18,200 $1,227,620 21,400 $1,085,600 $ 158,600 90,500 32,700 28,600 360,000 300,000 11,520 13,500 180,000 180,000 454,440 449,000 30,360 24,000 $1,227,620 $1,085,600 PARENTO INC. CONSOLIDATED INCOME STATEMENT For the year ended December 31, Year 4 Cost of sales Selling expense Administrative expense Interest expense Income tax Net income Attributable to: Parento's shareholders Non-controlling interest $ 978,000 $537,900 146,700 179,000 40,600 43,000 947,200 $ 30,800 $ 22,440 8,360 Parento Inc. purchased its 80% interest in Santana Corp. on January 1, Year 2, for $122,000 when Santana had net assets of $90,000. The acquisition differential was allocated $32,000 to databases (10-year life), with the balance allocated to equipment (20-year life). Parento issued $60,000 in bonds on December 31, Year 4. Santana reported a net income of $45,000 for Year 4 and paid dividends of $10,000. Selling and administrative expense includes the following: Depreciation of buildings and equipment Database amortization Loss on land sale $ 43,500 3,200 3,000 Parento reported a Year 4 equity method income of $22,440 and paid dividends of $17,000. Required: (a) Prepare a consolidated cash flow statement for Year 4. (Amounts to be deducted and negative net cash amount should be indicated with minus sign.) Parento Inc. Consolidated Cash Flow Statement For the Year Ended December 31, Year 4 Operating cash flow: Add (deduct): Investing cash flow: Financing cash flow: Net increase/(decrease) in cash during the year Cash at the beginning of the year Cash at the end of the year 0 0 0 0 69 $ 0

Parento Inc. owns 80% of Santana Corp. The consolidated financial statements of Parento follow: PARENTO INC. CONSOLIDATED BALANCE SHEET At December 31, Year 4 Cash Accounts receivable Inventory Land Buildings and equipment Accumulated depreciation Databases Accounts payable Accrued liabilities Bonds payable Bond premium Common shares Retained earnings Non-controlling interest Sales Year 4 $ 127,620 Year 3 $ 55,200 115,500 137,200 329,000 214,000 120,000 193,000 796,000 700,000 (278,700) (235,200) 18,200 $1,227,620 21,400 $1,085,600 $ 158,600 90,500 32,700 28,600 360,000 300,000 11,520 13,500 180,000 180,000 454,440 449,000 30,360 24,000 $1,227,620 $1,085,600 PARENTO INC. CONSOLIDATED INCOME STATEMENT For the year ended December 31, Year 4 Cost of sales Selling expense Administrative expense Interest expense Income tax Net income Attributable to: Parento's shareholders Non-controlling interest $ 978,000 $537,900 146,700 179,000 40,600 43,000 947,200 $ 30,800 $ 22,440 8,360 Parento Inc. purchased its 80% interest in Santana Corp. on January 1, Year 2, for $122,000 when Santana had net assets of $90,000. The acquisition differential was allocated $32,000 to databases (10-year life), with the balance allocated to equipment (20-year life). Parento issued $60,000 in bonds on December 31, Year 4. Santana reported a net income of $45,000 for Year 4 and paid dividends of $10,000. Selling and administrative expense includes the following: Depreciation of buildings and equipment Database amortization Loss on land sale $ 43,500 3,200 3,000 Parento reported a Year 4 equity method income of $22,440 and paid dividends of $17,000. Required: (a) Prepare a consolidated cash flow statement for Year 4. (Amounts to be deducted and negative net cash amount should be indicated with minus sign.) Parento Inc. Consolidated Cash Flow Statement For the Year Ended December 31, Year 4 Operating cash flow: Add (deduct): Investing cash flow: Financing cash flow: Net increase/(decrease) in cash during the year Cash at the beginning of the year Cash at the end of the year 0 0 0 0 69 $ 0

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 1BCRQ

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