Sun Corporation was created on January 1, 20X2, and quickly became successful. On January 1, 20X6, its
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 Planet 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 Sun. Planet 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; Planet 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 from operations.
PLANET COMPANY AND SUBSIDIARY Consolidated Balance Sheets January 1, 20X6 $ 54,000 121,000 230,000 95,000 800,000 (290,000) Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation December 31, 20X6 $ 75,000 111,000 360,000 100,000 650,000 (230,000)
Step by Step Answer:
Item Cash Accounts Receivable Inventory Land Buildings and Equipment PlanetCompany and Sun Corporati...View the full answer
Advanced Financial Accounting
ISBN: 9781260772135
13th Edition
Authors: Theodore Christensen, David Cottrell, Cassy Budd
Related Video
Financial statements of a business having numerous divisions or subsidiaries are called consolidated financial statements. Companies frequently refer to the aggregated reporting of their entire firm together when using the term \"consolidated\" in financial statement reporting. Consolidated financial statement reporting, on the other hand, is defined by the Financial Accounting Standards Board as the reporting of an entity that is organized with a parent company and subsidiaries.
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