Boycott Company Holds 75 Percent Ownership of Fred Corporation

Essay

Boycott Company holds 75 percent ownership of Fred Corporation.The consolidated balance sheets as of December 31,20X8,and December 31,20X9,are as follows:
The 20X9 consolidated income statement contained the following amounts:

Boycott acquired its investment in Fred on January 1,20X6,for $120,000.At that date,the fair value of the noncontrolling interest was $40,000,and Fred reported net assets of $130,000.A total of $20,000 of the differential was assigned to goodwill.The remainder of the differential was assigned to equipment with a remaining life of 10 years from the date of combination.

Boycott sold $100,000 of bonds on December 31,20X9,to assist in generating additional funds.Fred reported net income of $20,000 for 20X9 and paid dividends of $10,000.Boycott reported 20X9 equity-method net income of $75,000 paid dividends of $20,000 for the year.
Required:
1)Prepare a worksheet to develop a consolidated statement of cash flows for 20X9 using the indirect method of computing cash flows from operations.
2)Prepare a consolidated statement of cash flows for 20X9.
Problem 55 (continued):