Alford Company and its 80 percent-owned subsidiary, Knight, have the following income statements for 2021:Knight$ (230,000)Alford$ (500,000)300,00040,000140,00010,00020,00020,000(30,000)(36,200)$ (206, 200)RevenuesCost of goods soldDepreciation and amortizationOther expensesGain on sale of equipmentEquity in earnings of KnightNet income00$ (60,000)Additional Information for 2021• Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford toKnight.• Intra-entity gross profits in inventory 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.Net cash flows from operating activitiesUsing either the direct or indirect method, compute net cash flows from operating activities during the period for the businesscombination.

The transactions that go into determining net income are known as operating activities. The amount…

Alford Company and its 80 percent-owned subsidiary, Knight, have the following income statements for 2021: Alford $ (500,000) 300,000 40,000 20,000 (30,000) (36,200) $ (206,200) Revenues Cost of goods sold Depreciation and amortization Other expenses Gain on sale of equipment Equity in earnings of Knight Net income Knight $ (230,000) 140,000 10,000 20,000 0 0 $ (60,000)

Alford Company and its 80 percent-owned subsidiary, Knight, have the following income statements for 2021: Alford $ (500,000) 300,000 40,000 20,000 (30,000) (36,200) $ (206,200) Revenues Cost of goods sold Depreciation and amortization Other expenses Gain on sale of equipment Equity in earnings of Knight Net income Knight $ (230,000) 140,000 10,000 20,000 0 0 $ (60,000)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2P

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