1. Plateau Company acquires an 80% interest in Seagull Company for $200,000 cash on January 1,
2011. On that date, Seagull
Solution
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Please find the detailed answer as follows:
Cash Flow from Operating Activities
Net Income 103900
Adjustments to Reconcile Net Income to Net Cash
Gain on Sale of Equipment -3000
Depreciation Expense 33000
Decrease in Inventory 7000
Increase in Current Liabilities 16200
Total Adjustments 53200
Net Cash Provided by Operating Activities 157100
Cash Flow from Investing Activities
Purchase of Interest in Seagull, Less Cash Paid -170000
Proceeds from Sale of Equipment 33000
Net Cash Used by Investing Activities -137000
Cash Flow from Financing Activities
Dividends Paid
By Plateau -30000
By Seagull, to non controlling interest -3000
Net Cash Used by Financing Activities -33000
Net Decrease in Cash (157100 -137000