Metal Corporation acquired 75 percent ownership of Ocean Company on January 1, 2
ID: 2335887 • Letter: M
Question
Metal Corporation acquired 75 percent ownership of Ocean Company on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Ocean Company balance sheets at January 1, 20X3, and December 31, 20X3, are as follows Consolidated Jan. 1. Dec. 31 20X3 Item Assets Cash Accounts Receivable 20X3 S 75,500 $107,500 94,000 109,000 117.000 125.000 46.000 56.000 522.000 557,000 180,500) (217,000) 6,000 5,000 Buildings & Equipment Less: Accumulated Depreciation Patents Total Assets $ 680,000 $ 742.500 Liabilities & Owners' Equity Accounts Payable Wages Payable Notes Payable Common Stock ($10 par value) Retained Earnings Noncontrolling Interest S 55,000 $ 60,000 22,000 16,000 235,000 250,000 148,000 148,000 200,000 244,500 20,000 24.000 Total Liabilities &Owners Equity S 680.000 $ 742.500 The consolidated income statement for 20X3 contained the following amounts Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Amortization Expense Other Expenses 49.000 36,500 11,000 1,000 25,000 (377,500) Consolidated Net Income Income to Noncontrolling Interest $ 86,000 (9,500) Income to Controlling Interest $ 76,500 Metal and Ocean paid dividends of $32,000 and $22,000 respectively, in 20X3Explanation / Answer
Metal Corporation and subsidiary Consolidated cash flow worksheet Year ended December 31, 20X3 Consolidation entries Item Balance 1/1/X3 Debit Credit Balance 31/12/X3 Assets Cash 75500 32000 107500 Accounts Receivable 94000 15000 109000 Inventory 117000 8000 125000 Land 46000 10000 56000 Building & Equipment 522000 35000 557000 Less : Accumulated Depreication -180500 -36500 -217000 Patents 6000 1000 5000 Total assets 680000 742500 Liabilities & Equity Accounts Payable 55000 5000 60000 Wages payable 22000 6000 16000 Notes Payable 235000 15000 250000 Common Stock 148000 148000 Retained Earnings 200000 44500 244500 Non-Controlling Interest 20000 4000 24000 Total Liabilities and owner's equity 680000 742500 Resources Uses Cash flows from operating activites Consolidated net Income 86000 Depreication expense 36500 Amortization of patents 1000 Changes in operating assets and Liabilities Increase in Accounts Receivable 15000 Increase in Inventory 8000 Increase in Accounts payable 5000 Decrease in Wages payable 6000 Cash flows from investing activities Purchase of Land 10000 Purchase of Buildings and equipment 35000 Cash flows from financing activities Increase in Notes payable 15000 Dividends paid to Metal corporation shareholders 32000 Ocean Company shareholders 5500 Subtotal 143500 111500 Increase in cash 32000 Total 143500 143500 Metal Corporation and subsidiary Consolidated statement of cash flow Year ended December 31, 20X3 Cash flows from operating activites Consolidated net Income 86000 Depreication expense 36500 Amortization of patents 1000 Changes in operating assets and Liabilities Increase in Accounts Receivable -15000 Increase in Inventory -8000 Increase in Accounts payable 5000 Decrease in Wages payable -6000 Net Cash flows from Operating Activities 99500 Cash flows from investing activities Purchase of Land -10000 Purchase of Buildings and equipment -35000 Net Cash flows from Investing activities -45000 Cash flows from financing activities Increase in Notes payable 15000 Dividends paid to Metal corporation shareholders -32000 Ocean Company shareholders -5500 Net Cash flows from Financing activities -22500 Net Cash Flows 32000 Cash at the Beginning of year 75500 Cash at the end of year 107500