Paridon Motors purchases an 80% interest in Snap Battery Company on January 1, 2012, for $700,000 cash. At that date, Snap Battery Company has the following stockholders’ equity: Common stock ($10 par). . . . . . . . . . . . . . . . . . . . . . $100,000 Paid-in capital in excess of par . . . . . . . . . . . . . . . . . 300,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . $650,000 Any excess of cost over book value is attributed to goodwill. A statement of cash flows is being prepared for 2015. For each of the following situations, indicate the impact on the cash flow statement for 2015: 1. Adjustment resulting from the original acquisition of the controlling interest. 2. Snap Battery Company issues 2,000 shares of common stock for $90 per share on January 1, 2015. At the time, the stockholders’ equity of Snap Battery is $800,000. Paridon Motors purchases 1,000 shares. 3. Paridon Motors purchases at 102, $100,000 of face value, 10% annual interest bonds issued by Snap Battery Company at face value on January 1, 2013. Paridon purchases the bonds on January 1, 2015.4. Snap Battery purchases a production machine from Paridon Motors on July 1, 2015, for $80,000. Paridon’s cost is $60,000, and accumulated depreciation is $20,000.
Paridon Motors purchases an 80% interest in Snap Battery Company on January 1, 2012, for $700,000 cash. At that date, Snap Battery Company has the following stockholders’ equity:
Common stock ($10 par). . . . . . . . . . . . . . . . . . . . . . $100,000
Paid-in capital in excess of par . . . . . . . . . . . . . . . . . 300,000
Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . $650,000
Any excess of cost over book value is attributed to
1. Adjustment resulting from the original acquisition of the controlling interest.
2. Snap Battery Company issues 2,000 shares of common stock for $90 per share on January 1, 2015. At the time, the stockholders’ equity of Snap Battery is $800,000. Paridon Motors purchases 1,000 shares.
3. Paridon Motors purchases at 102, $100,000 of face value, 10% annual interest bonds issued by Snap Battery Company at face value on January 1, 2013. Paridon purchases the bonds on January 1, 2015.
4. Snap Battery purchases a production machine from Paridon Motors on July 1, 2015, for $80,000. Paridon’s cost is $60,000, and
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