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Bolero Company holds 75 percent of the common stock of Rivera, Inc., and 40 percent of...

Bolero Company holds 75 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2017 and 2018:

2017 2018
Revenues $ (945,000 ) $ (1,075,000 )
Cost of goods sold 619,000 659,000
Depreciation and amortization 109,000 138,000
Gain on sale of building 0 (39,000 )
Interest expense 49,000 49,000
Consolidated net income (168,000 ) (268,000 )
to noncontrolling interest 28,000 30,000
to parent company $ (140,000 ) $ (238,000 )
Retained earnings, 1/1 $ (319,000 ) $ (390,000 )
Net income (140,000 ) (238,000 )
Dividends declared 69,000 119,000
Retained earnings, 12/31 $ (390,000 ) $ (509,000 )
Cash $ 99,000 $ 198,000
Accounts receivable 188,000 159,000
Inventory 219,000 378,000
Buildings and equipment (net) 659,000 737,000
Databases 188,000 164,000
Total assets $ 1,353,000 $ 1,636,000
Accounts payable $ (161,000 ) $ (128,000 )
Bonds payable (419,000 ) (538,000 )
Noncontrolling interest in Rivera (51,000 ) (70,000 )
Common stock (136,000 ) (149,000 )
Additional paid-in capital (196,000 ) (242,000 )
Retained earnings (390,000 ) (509,000 )
Total liabilities and equities $ (1,353,000 ) $ (1,636,000 )

Additional Information for 2018

The parent issued bonds during the year for cash.

Amortization of databases amounts to $24,000 per year.

The parent sold a building with a cost of $98,000 but a $49,000 book value for cash on May 11.

The subsidiary purchased equipment on July 23 for $241,000 in cash.

Late in November, the parent issued stock for cash.

During the year, the subsidiary paid dividends of $44,000. Both parent and subsidiary pay dividends in the same year as declared.

Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018. (Use indirect method)

PLEASE SHOW ALL WORK AND STEPS TO GET EACH ANSWER, THANK YOU

Solutions

Expert Solution

BOLERO COMPANY AND CONSOLIDATED SUBSIDIARY RIVERA

Consolidated Statement of Cash Flows

Year Ending December 31, 2018

CASH FLOWS FROM OPERATING ACTIVTIES

Consolidated net income

268000

Adjustment from accrual to cash:

Depreciation and amortization

138000

Gain on sale of building

(39000)

Decrease in accounts receivable (188000-159000)

29000

Increase in inventory (219000-378000)

(159000)

Decrease in accounts payable (128000-161000)

(33000)

Net cash flow from operating activities

204000

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of building (49000+39000)

88000

Purchase of equipment (given)

(241000)

Net cash flow from investing activities

(153000)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (119000+44000)

(163000)

Issuance of bonds (538000-419000)

119000

Issuance of common stock (149000-136000)+(242000-196000)

59000

Net cash flow from financing activities

15000

Net increase in cash during 2018

66000


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