Locus Corporation Acquired 80 Percent Ownership of Stereo Company on January

Essay

Locus Corporation acquired 80 percent ownership of Stereo Company on January 1,20X6,at underlying book value.At that date,the fair value of the noncontrolling interest was equal to 20 percent of the book value of Stereo Company.Consolidated balance sheets at January 1,20X8,and December 31,20X8,are as follows:
The consolidated income statement for 20X8 contained the following amounts:

Locus and Stereo paid dividends of $25,000 and $15,000,respectively,in 20X8.

Required:
1)Prepare a worksheet to develop a consolidated statement of cash flows for 20X8 using the direct method of computing cash flows from operations.
2)Prepare a consolidated statement of cash flows for 20X8.
Problem 54 (continued)