In: Accounting
A Corp. owns 80% of B Corp. The Consolidated Financial Statements of A Corp. for 2018 and 2019 are shown below:
A Corp.
Consolidated Balance Sheet, December 31, 2019
2019 |
2018 |
|
Cash |
$180,000 |
$40,000 |
Accounts Receivable |
$300,000 |
$100,000 |
Inventory |
$400,000 |
$100,000 |
Land |
$160,000 |
$200,000 |
Plant and Equipment |
$1,650,000 |
$1,170,000 |
Accumulated Depreciation |
($800,000) |
($770,000) |
Goodwill |
$60,000 |
$60,000 |
Total Assets |
$1,950,000 |
$900,000 |
Accounts Payable |
$326,000 |
$40,000 |
Accrued Liabilities |
$350,000 |
$140,000 |
Bonds Payable |
$400,000 |
$100,000 |
Less Bond Discount |
($40,000) |
($50,000) |
Non-Controlling Interest |
$214,000 |
$200,000 |
Common Shares |
$350,000 |
$350,000 |
Retained Earnings |
$350,000 |
$120,000 |
Total Liabilities and Equity |
$1,950,000 |
$900,000 |
A Corp.
Consolidated Income Statement, For the year ended December 31, 2019
Sales |
$500,000 |
|
Cost of aales |
$115,000 |
|
Depreciation |
$30,000 |
|
Interest expense |
$50,000 |
|
Gain on land sale |
($10,000) |
|
($185,000) |
||
Net income |
$315,000 |
|
Attributable to: |
||
Shareholders of Parent |
$300,000 |
|
Non-Controlling Interest |
$15,000 |
|
Other Information:
A purchased its interest in B on January 1, 2015 for $360,000 when the company's net assets were valued at $300,000. The acquisition differential was allocated equally between goodwill and equipment, which was estimated to have a remaining useful life of ten years from the acquisition date.
B reported a net income of $75,000 and paid dividends of $5,000 during 2019.
A issued $300,000 in bonds during the year. A reported an equity method net Income of $300,000 and paid $70,000 in dividends to its shareholders.
Required:
Prepare a Consolidated Statement of Cash Flows for A Corp. for 2019.
Cash flow from Operating Activities | Amount | |
Net Profit As per Income Statement | 3,15,000.00 | |
Depreciation | 30,000.00 | |
Net Profit Before Working Capital Changes | 3,45,000.00 | |
Changes In Working Capital | ||
- Increase In Accounts Payable | 2,86,000.00 | |
- Increase In Accrued Liability | 2,10,000.00 | |
- Increase in accounts receivable | -2,00,000.00 | |
- Increase in inventory | -3,00,000.00 | |
Cash From Operating Activity (A) | 3,41,000.00 | |
Cash flow from Investing Activities | ||
- Puchase of Plant & Equipment | -4,80,000.00 | |
- Dividend Received (Note 1) | 4,000.00 | |
- Sale of Land (Note 2) | 50,000.00 | |
Cash From Investing Activity (B) | -4,26,000.00 | |
Cash flow from Financial Activities | ||
- Bonds Issued | 3,00,000.00 | |
- Dividend Paid | -75,000.00 | |
Cash From Financial Activity (C) | 2,25,000.00 | |
Opening Cash Balance | 40,000.00 | |
Changes (A+B+C) | 1,40,000.00 | |
Closing Cash Balance | 1,80,000.00 | |
Note 1 : Dividend Received | ||
Dividend Paid by B | 5,000.00 | |
Share in B | 80% | |
Dividend Received by A | 4,000.00 | |
Note 2 : Sale of Land | ||
Decrease in Value of Land | 40,000.00 | |
Gain on sale of land | 10,000.00 | |
Sale Value | 50,000.00 |