The Following Information Has Been Taken from the Consolidation Worksheet

question 66

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 is the loss on sale of land reported on the consolidated statement of cash flows?

• A) $20,000 added to net income as an operating activity.
• B) $20,000 deducted from net income as an operating activity.
• C) $15,000 deducted from net income as an operating activity.
• D) $5,000 added to net income as an operating activity.
• E) $5,000 deducted from net income as an operating activity.

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Definitions:

Lien

A legal right or interest that a creditor has in the debtor's property, typically lasting until the debt that it secures is paid.

Accommodation Surety

A surety who cosigns a loan or credit application for another with no benefit received, assuring the lender that the loan will be repaid.

Compensation

Payment or reward given for service, performance, or damage incurred.

Artisan

A skilled craftsperson who makes or creates things by hand that may be functional or strictly decorative.