Consolidated statement of cash flows–indirect method (sale of an interest)
Comparative consolidated financial statements for Pop Corporation and its subsidiary, Sat Corporation, at and for the years ended December 31, 2012 and 2011 follow (in thousands).
Pop Corporation and Subsidiary Comparative Consolidated Financial Statements at and for the Years Ended December 31, 2012 and 2011
|
Year 2012 |
Year 2011 |
Year’s Change 2012–2011 |
|
|
Income Statement |
|||
|
Sales |
$3,050.0 |
$2,850.0 |
$ 200.0 |
|
Gain on 10% interest |
5.7 |
5.7 |
|
|
Cost of sales |
(1,750.7) |
(1,690.0) |
(60.7) |
|
Depreciation expense |
(528.0) |
(508.0) |
(20.0) |
|
Other expenses |
(455.0) |
(392.0) |
(63.0) |
|
Noncontrolling interest share |
(22.0 ) |
(10.0 ) |
(12.0 ) |
|
Net income |
$ 300.0 |
$ 250.0 |
$ 50.0 |
|
Retained Earnings |
|||
|
Retained earnings—beginning |
$1,000.0 |
$ 950.0 |
$ 50.0 |
|
Net income |
300.0 |
250.0 |
50.0 |
|
Dividends |
(200.0 ) |
(200.0 ) |
.0 |
|
Retained earnings—ending |
$1,100.0 |
$1,000.0 |
$ 100.0 |
|
Balance Sheet |
|||
|
Cash |
$ 46.5 |
$ 50.5 |
$ (4.0) |
|
Accounts receivable—net |
87.5 |
90.0 |
(2.5) |
|
Inventories |
377.5 |
247.5 |
130.0 |
|
Prepaid expenses |
68.0 |
88.0 |
(20.0) |
|
Equipment |
2,970.0 |
2,880.0 |
90.0 |
|
Accumulated depreciation |
(1,542.0) |
(1,044.0) |
(498.0) |
|
Land and buildings |
960.0 |
960.0 |
.0 |
|
Accumulated depreciation |
(300.0 ) |
(272.0 ) |
(28.0 ) |
|
Total assets |
$2,667.5 |
$3,000.0 |
$(332.5) |
|
Accounts payable |
$ 140.0 |
$ 343.5 |
$(203.5) |
|
Dividends payable |
52.5 |
52.5 |
.0 |
|
Long term notes payable |
245.0 |
545.0 |
(300.0) |
|
Capital stock, $10 par |
1,000.0 |
1,000.0 |
.0 |
|
Retained earnings |
1,100.0 |
1,000.0 |
100.0 |
|
Noncontrolling interest |
130.0 |
59.0 |
71.0 |
|
Total equities |
$2,667.5 |
$3,000.0 |
$(332.5) |
REQUIRED: Prepare a consolidated statement of cash flows for the year ended December 31, 2012. The changes in equipment are due to a $100,000 equipment acquisition, current depreciation, and the sale of one ninth of the fair value/book value differential allocated to equipment ($10,000) and related accumulated depreciation ($2,000). This reduction in the unamortized fair value/book value differential results from selling a 10 percent interest in Sat for $72,700 and thereby reducing its interest from 90 percent to 80 percent Sat’s net income and dividends for 2012 were $110,000 and $50,000, respectively. Use the indirect method.