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:

Optic Canal

A narrow passageway in the skull through which the optic nerve runs from the eye to the brain.

Sella Turcica

A saddle-shaped depression in the sphenoid bone at the base of the human skull, housing the pituitary gland.

Sphenoid

A butterfly-shaped bone at the base of the skull that forms part of the floor and sides of the skull as well as the orbits around the eyes.