Ford Motor Companys 2011 financial statements revealed that it has extensive equity method investments. In total, the

Question:

Ford Motor Company’s 2011 financial statements revealed that it has extensive equity method investments. In total, the balance sheet showed equity investments of $2,569 million at December 31, 2010, and $2,936 million at December 31, 2011. During 2011 Ford included equity income of $500 million in its income statement, and footnote 11 indicates that approximately $316 million in dividends was received from equity investees.

1. Compute the approximate change in Ford’s equity investment asset that cannot be explained by either increases (decreases) due to its share in earnings (losses) or decreases due to dividends received. You may find a T-account will help your analysis.

2. Ford uses the indirect method to construct its cash flow statement. Indicate how these transactions with equity investees would be shown in the statement of cash flows.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...