New Life Corporation Has Just Finished Preparing a Consolidated Balance

question 27

Multiple Choice

New Life Corporation has just finished preparing a consolidated balance sheet,income statement,and statement of changes in retained earnings for 2009.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 21,2006.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,what amount will be reported in the consolidated cash flow statement as net cash used in financing activities for 2009?

• A)$40,000
• B)$55,000
• C)$90,000
• D)$10,000

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Definitions:

Delegable Duty

A responsibility or duty that can be transferred or assigned from one party to another, often seen in contexts of employment or contractual agreements.

Incidental Beneficiary

A third party who benefits from a contract between two other parties, although the benefit was not the reason the contract was formed.

Donee Beneficiary

A third party who benefits from a contract made between two other parties, particularly where the contract's intent is to gift something to the beneficiary.

Creditor Beneficiary

A third party that benefits from a contract in which one party promises to pay a debt owed to the third party by the other contract party.