New Life Corporation Has Just Finished Preparing a Consolidated Balance

question 25

Multiple Choice

New Life Corporation has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for 20X9. The following items are proposed for inclusion in the consolidated cash flow statement: New Life holds 75 percent of the voting stock of Shane Pharmaceuticals, acquired at book value on June 21, 20X6. On the date of the acquisition, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Shane.
Based on the preceding information, assuming that New Life uses the direct method of computing cash flows from operating activities, what amount will be reported by the company as cash received from customers during the year?

• A) $815,000
• B) $785,000
• C) $800,000
• D) $835,000

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Definitions:

Living Standards

refer to the quality and quantity of goods and services available to people, and the way these goods and services are distributed within a population.

Birthrates

The number of live births per thousand of the population in a specific time period.

Demographic Transition

The massive decline in birth rates that occurs once a developing country achieves higher standards of living because the perceived marginal cost of additional children begins to exceed the perceived marginal benefit.

Death Rates

The number of deaths in a particular population, scaled to the size of that population, per unit of time, typically expressed per 1000 individuals per year.