The Following Information Has Been Taken from the Consolidation Worksheet

question 9

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 of $5,000. The land cost Graham $20,000.
(2) ) Non-controlling 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 was expensed by $6,000.
(6) ) Consolidated accounts receivable decreased by $8,000.
(7) ) Consolidated accounts payable decreased by $7,000.
How will dividends be reported in consolidated statement of cash flows?

• A) $15,000 decrease as a financing activity.
• B) $25,000 decrease as a financing activity.
• C) $10,000 decrease as a financing activity.
• D) $23,000 decrease as a financing activity.
• E) $17,000 decrease as a financing activity.

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Definitions:

Commercial Property

Real estate property that is used for business activities.

Reasonable Security

Measures taken to protect against foreseeable threats to safety and security.

Liability

A legal responsibility or obligation, often involving the need to pay damages or restitution as a result of one's actions or failure to act.

Implied Warranty

A legal guarantee implied by law that ensures goods or services sold are of satisfactory quality and fit for their intended purpose.