Tower Corporation's Controller Has Just Finished Preparing a Consolidated Balance

question 5

Multiple Choice

Tower Corporation's controller has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for the year ended December 31, 20X9. Tower owns 80 percent of Network Corporation's stock, which it acquired at underlying book value on November 1, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of Network Corporation's book value. The following information is available:
Consolidated net income for 20X9 was $160,000.
Network reported net income of $50,000 for 20X9.
Tower paid dividends of $30,000 in 20X9.
Network paid dividends of $10,000 in 20X9.
Tower issued common stock on February, 18, 20X9, for a total of $100,000.
Consolidated wages payable decreased by $6,000 in 20X9.
Consolidated depreciation expense for the year was $15,000.
Consolidated accounts receivable decreased by $20,000 in 20X9.
Bonds payable of Tower with a book value of $102,000 were retired for $100,000 on December 31, 20X9.
Consolidated amortization expense on patents was $10,000 for 20X9.
Tower sold land that it had purchased for $75,000 to a nonaffiliate for $80,000 on June 10, 20X9.
Consolidated accounts payable decreased by $7,000 during 20X9.
Total purchases of equipment by Tower and Network during 20X9 were $180,000.
Consolidated inventory increased by $36,000 during 20X9.
There were no intercompany transfers between Tower and Network in 20X9 or prior years except for Network's payment of dividends. Tower uses the indirect method in preparing its cash flow statement.
Based on the preceding information, what amount will be reported in the consolidated cash flow statement as net cash provided by operating activities for 20X9?

• A) $207,000
• B) $163,000
• C) $180,000
• D) $149,000

Interpret and calculate performance measures such as profit margin and return on total assets.

Understand the significance and calculation of working capital.

Comprehend the implications of financial ratios in evaluating a company’s solvency, liquidity, and operational efficiency.

Grasp the concept of trend percentages and common size percentages to analyze financial statements.

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Definitions:

Administration

The process of managing or overseeing the operations of a business, organization, or institution.

Dermis

The dermis is the thick layer of living tissue below the epidermis that forms the true skin, containing blood capillaries, nerve endings, sweat glands, hair follicles, and other structures.

Integumentary

Pertaining to the body's skin, hair, nails, and exocrine glands, which provide protection and sensation.

Integumentary

Pertaining to the body system that includes skin, hair, nails, and associated glands.