The Following Information Has Been Taken from the Consolidation Worksheet

question 88

Multiple Choice

The following information has been taken from the consolidation worksheet of Graham Company and its 80% owned subsidiary, Stage Company.(1.) Graham reports a loss on sale of land (to an outside party) of $5,000. The land cost Graham $20,000.(2.) Noncontrolling interest in Stage's net income was $30,000.(3.) Graham paid dividends of $15,000.(4.) Stage paid dividends of $10,000.(5.) Excess acquisition-date fair value over book value amortization was $6,000.(6.) Consolidated accounts receivable decreased by $8,000.(7.) Consolidated accounts payable decreased by $7,000.How is the loss on sale of land reported on the consolidated statement of cash flows?

• A) $20,000 added to net income as an operating activity.
• B) $20,000 deducted from net income as an operating activity.
• C) $15,000 deducted from net income as an operating activity.
• D) $5,000 added to net income as an operating activity.
• E) $5,000 deducted from net income as an operating activity.

---

Definitions:

Incentive Structure

An incentive structure is a system of rewards and penalties that aims to motivate individuals or entities to act in a certain way that aligns with specific objectives or goals.

Organization

A structured group of individuals working together towards common goals or objectives, often characterized by a specific hierarchy and roles.

Vice President

An executive role in a company or government, typically below the president, responsible for specific departments or decision-making.

Sales Staff

Sales staff are employees dedicated to selling products or services, often working directly with customers to meet their needs and close sales.