A parent company acquired a 75% interest in a subsidiary company in Year 4. The acquisition price was $1,000,000, made up of cash of $700,000 and the parent’s common shares with a current market value of $300,000. Explain how this acquisition should be reflected in the Year 4 consolidated cash flow statement.
Answer to relevant QuestionsWhy is the amortization of the acquisition differential added back to consolidated net income to compute net cash flow from operating activities in the consolidated cash flow statement? A parent company will realize a loss or a gain when its subsidiary issues common shares at a price per share that differs from the carrying amount per share of the parent’s investment, and the parent’s ownership ...The following Year 1 consolidated cash flow statement was prepared for Standard Manufacturing Corp. and its 60%-owned subsidiary, Pritchard Windows Inc.: Required: (a) Did the loss on the sale of equipment shown above ...On December 31, Year 6, Ultra Software Limited purchased 70,000 common shares (70%) of a major competitor, Personal Program Corporation (PPC), at $30 per share. Several shareholders who were unwilling to sell at that time ...Parent Co. owns 9,500 shares of Sub Co. and accounts for its investment by the equity method. On December 31, Year 5, the shareholders’ equity of Sub was as follows: Common shares (10,000 shares ...
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