Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2011:
|
Alford |
Knight |
|
|
Revenues |
$(500,000) |
$(230,000) |
|
Cost of goods sold |
300,000 |
140,000 |
|
Depreciation and amortization |
40,000 |
10,000 |
|
Other expenses |
20,000 |
20,000 |
|
Gain on sale of equipment |
(30,000) |
–0– |
|
Equity in earnings of Knight |
(36,200) |
–0– |
|
Net income |
$(206,200) |
$ (60,000) |
• Intra entity inventory transfers during the year amounted to $90,000 and were downstream from Alford to Knight.
• Unrealized inventory gains at January 1 were $6,000, but at December 31, they are $9,000.
• Annual excess amortization expense resulting from the acquisition is $11,000.
• Knight paid dividends totaling $20,000.
• The noncontrolling interest’s share of the subsidiary’s income is $9,800.
• During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively.
Using either the direct or the indirect approach, determine the amount of cash generated from operations during the period by this business combination.