Question

The following 20X2 consolidated statement of cash flows is presented for Acme Printing Company and its subsidiary, Jones Delivery:


Acme Printing acquired 60 percent of the voting shares of Jones in 20X1 at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Jones Delivery.

Required
a. Determine the amount of dividends paid by Jones in 20X2.
b. Explain why the amortization of bond premium is treated as a deduction from net income in arriving at net cash flows from operating activities.
c. Explain why an increase in accounts receivable is treated as a deduction from net income in arriving at net cash flows from operating activities.
d. Explain why dividends to noncontrolling stockholders are not shown as a dividend payment in the retained earnings statement but are shown as a distribution of cash in the consolidated cash flow statement.
e. Did the loss on the sale of equipment included in the consolidated statement of cash flows result from a sale to an affiliate or a nonaffiliate? How do youknow?


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  • CreatedMay 23, 2014
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