Question

Sun Corporation was created on January 1, 20X2, and quickly became successful. On January 1, 20X6, its owner sold 80 percent of the stock to Weatherbee Company at underlying book value. At the date of that sale, the fair value of the remaining shares was equal to 20 percent of the book value of Weatherbee. Weatherbee continued to operate the subsidiary as a separate legal entity and used the equity method in accounting for its investment in Sun. The following consolidated financial statements have been prepared: During 20X6, Sun reported net income of $60,000 and paid dividends of $20,000; Weatherbee reported net income of $148,000 and paid dividends of $65,000. There were no intercompany transfers during the period.





WEATHERBEE COMPANY AND SUBSIDIARY
Consolidated Retained Earnings Statement
Year Ended December 31, 20X6
Balance, January 1, 20X6 ..... $290,000
Income to Controlling Interest.... 148,000
$438,000
Dividends Declared, 20X6 ....... (65,000)
Balance, December 31, 20X6..... $373,000

During 20X6, Sun reported net income of $60,000 and paid dividends of $20,000; Weatherbee reported net income of $148,000 and paid dividends of $65,000. There were no intercompany transfers during the period.

Required
Prepare a worksheet for a consolidated statement of cash flows for 20X6 using the indirect method of computing cash flows fromoperations.


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  • CreatedMay 23, 2014
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