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:

Declared

Pertains to dividends or other distributions that have been officially announced by a company's board of directors.

Dividend Payments

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Preferred Shareholders

Investors who own preferred shares in a company, which typically come with a fixed dividend but no voting rights.

Bondholders

Individuals or institutions that hold debt securities issued by corporations or governments, thereby lending them money.