Question

In: Accounting

The following information has been taken from the consolidation worksheet of Graham Company and its 80%...

The following information has been taken from the consolidation worksheet of Graham Company and its 80% owned subsidiary, Stage Company. (1.) Graham reports a loss on sale of land (to an outside party) of $5,000. The land cost Graham $20,000. (2.) Noncontrolling interest in Stage's net income was $30,000. (3.) Graham paid dividends of $15,000. (4.) Stage paid dividends of $10,000. (5.) Excess acquisition-date fair value over book value amortization was $6,000. (6.) Consolidated accounts receivable decreased by $8,000. (7.) Consolidated accounts payable decreased by $7,000.

Using the indirect method, where does the decrease in accounts receivable appear in a consolidated statement of cash flows?

a) $6,400 increase to net income as an operating activity.

b) $8,000 decrease to net income as an operating activity.

c) $8,000 increase as an investing activity.

d) $6,400 decrease to net income as an operating activity.

e) $8,000 increase to net income as an operating activity.

How is the loss on sale of land reported on the consolidated statement of cash flows?

Multiple Choice

a) $5,000 added to net income as an operating activity.

b) $20,000 deducted from net income as an operating activity.

c) $20,000 added to net income as an operating activity.

d) $15,000 deducted from net income as an operating activity.

e) $5,000 deducted from net income as an operating activity.

Solutions

Expert Solution

i have explained the treatment of above cases and on that basis i have arrived at correct option of eachh question

ekkarill92 answered 2 years ago
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