Question

Badco Inc. purchased a 90% interest in Lazytoo Company for $600,000 cash on January 1, 2011. Any excess of implied over book value was attributed to depreciable assets with a 15-year remaining life (straight-line depreciation). To help pay for the acquisition, Badco issued $300,000, 20-year, 12% bonds at par value. Lazytoo’s balance sheet on the date of acquisition was as follows:


Consolidated net income for 2011 was $155,889. Badco declared and paid dividends of $10,000 and Lazytoo declared and paid dividends of $5,000. There were no purchases or sales of property, plant, and equipment during the year.
At the end of 2011, the following information was also available:



Required:
Prepare a consolidated statement of cash flows using the indirect method for Badco and its subsidiary for the year ended December 31,2011.


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  • CreatedMarch 13, 2015
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