Winter Corporation's Consolidated Cash Flow Statement for the Year Ended

question 56

Multiple Choice

Winter Corporation's consolidated cash flow statement for the year ended December 31, 20X2, reported operating cash inflows of $100,000, financing cash inflows of $30,000, investing cash outflows of $120,000, and an ending cash balance of $50,000. Winter acquired 60 percent of Snowboard Company's common stock on April 1, 20X0 at book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Snowboard's book value. Snowboard reported net income of $30,000, paid dividends of $20,000 in 20X2, and is included in Winter's consolidated statements. Winter paid dividends of $40,000 in 20X2. The indirect method is used in computing cash flows from operations.
-Dividends paid to noncontrolling shareholders:
I.are reported as a cash outflow in the consolidated cash flow statement.
II.represent funds that are no longer available to the consolidated entity.
III.are reported in the consolidated retained earnings statement.

• A) Observation I alone is true.
• B) Observation III alone is true.
• C) Observations I and II are true.
• D) Observations I, II, and II are true.

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Definitions:

Stock Dividend Distributable

A declaration by a company’s board of directors to issue a dividend in the form of additional shares rather than cash.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities; represents ownership interest.

Canada Business Corporations Act

The Canada Business Corporations Act is federal legislation that governs the incorporation and operation of corporations in Canada.