Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2021: Alford KnightRevenues$(500,000) $(230,000)Cost of goods sold 300,000 140,000 Depreciation and amortization 40,000 10,000 Other expenses 20,000 20,000 Gain on sale of equipment (30,000) 0 Equity in earnings of Knight (36,200) 0 Net income$(206,200) $(60,000) Additional Information for 2021Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to Knight.Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31, they are $9,000.Annual excess amortization expense resulting from the acquisition is $11,000.Knight paid dividends totaling $20,000.The noncontrolling interest's share of the subsidiary's income is $9,800.During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively. Using either the direct or indirect method, compute net cash flows from operating activities during the period for the business combination.

A cash Flow Statement is a part of the Financial Statement of a company. It literally means a…

Answered: Using either the direct or indirect…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2021:

	Alford		Knight
Revenues	$	(500,000	)	$	(230,000	)
Cost of goods sold		300,000			140,000
Depreciation and amortization		40,000			10,000
Other expenses		20,000			20,000
Gain on sale of equipment		(30,000	)		0
Equity in earnings of Knight		(36,200	)		0
Net income	$	(206,200	)	$	(60,000	)

Additional Information for 2021

Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to Knight.
Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31, they are $9,000.
Annual excess amortization expense resulting from the acquisition is $11,000.
Knight paid dividends totaling $20,000.
The noncontrolling interest's share of the subsidiary's income is $9,800.
During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively.

Using either the direct or indirect method, compute net cash flows from operating activities during the period for the business combination.

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