Note: This is basically a review problem from Acct 3021. We discussed the implications of Consolidations for Majority Owned Subsidiaries (Those with NCI).

Joey Corporation acquired 75 percent ownership of Legoria Company on January 1, 2021, at underlying book value. At that date, the fair value of the non-controlling interest was equal to 25 percent of the book value of Legoria Company. Consolidated Balance Sheets at January 1, 2023 and December 31, 2023, are as follows:

ITEM		Jan 1, 2023	Dec. 31, 2023
Cash		$ 68,500	$100,500
Accounts Receivable		82,000	97,000
Inventory		115,000	123,000
Land		45,000	55,000
Buildings and Equipment		515,000	550,000
Less: Accumulated Depreciation		(186,500)	(223,000)
Patents		5,000	4,000
Total Assets		$644,000	$706,500
Accounts Payable		$61,000	$66,000
Wages Payable		26,000	20,000
Notes Payable		250,000	265,000
Common Stock ($10 par value)		150,000	150,000
Retained Earnings		130,000	174,500
Non-controlling Interest		27,000	31,000
Total Liabilities and Stockholders' Equity		$644,000	$706,500

The Consolidated Income Statement for 2023 is:

Sales			$490,000
Cost of Goods Sold		$259,000
Wage Expense		55,000
Depreciation Expense		36,500
Interest Expense		16,000
Amortization Expense		1,000
Other Expenses		39,000	(406,500)
Consolidated Net Income			$83,500
NCI in Earnings of Subsidiary			(9,000)
Controlling Interest in Consolidated Net Income			$74,500

Joey and Legoria paid Dividends of $30,000 and $20,000, respectively, in 2023.

Required:

1. Prepare the Consolidated Statement of Cash Flows using the Indirect Methodfor 2023. Again, this is basically an Intermediate 2 question with a few twists added related to Advanced Accounting.

USE THE EXAMPLE 6-32

Consolidated net income

1. Describe how the Direct Method differsfrom the Indirect Method Statement of Cashflows (if it in fact does). This can be answered with a short written answer/paragraph.