Beta Corp Owns 80% of Gamma Corp Beta Corp
Consolidated Income Statement,
for the Year Ended December 31

question 30

Essay

Beta Corp. owns 80% of Gamma Corp. The Consolidated Financial Statements of Beta Corp. for 2019 and 2020 are shown below:
Beta Corp.
Consolidated Balance Sheet
$\begin{array}{|l|r|r|} \hline& \mathbf{2 0 2 0} & \mathbf{2 0 1 9} \\\hline \text { Cash } & \$ 180,000 & \$ 40,000 \\\hline \text { Accounts Receivable } & \$ 300,000 & \$ 100,000 \\\hline \text { Inventory } & \$ 400,000 & \$ 100,000 \\\hline \text { Land } & \$ 160,000 & \$ 200,000 \\\hline \text { Plant and Equipment } & \$ 1,650,000 & \$ 1,170,000 \\\hline \text { Accumulated Depreciation } & (\$ 800,000) & (\$ 770,000) \\\hline \text { Goodwill } & \$ 60,000 & \$ 60,000 \\\hline \text { Total Assets } & \$ 1,950,000 & \$ 900,000 \\\hline \text { Accounts Payable } & \$ 326,000 & \$ 40,000 \\\hline \text { Accrued Liabilities } & \$ 350,000 & \$ 140,000 \\\hline \text { Bonds Payable } & \$ 400,000 & \$ 100,000 \\\hline \text { Less Bond Discount } & (\$ 40,000) & (\$ 50,000) \\\hline \text { Non-Controlling Interest } & \$ 214,000 & \$ 200,000 \\\hline \text { Common Shares } & \$ 350,000 & \$ 350,000 \\\hline \text { Retained Earnings } & \$ 350,000 & \$ 120,000 \\\hline \text { Total Liabilities and } & \$ 1,950,000 & \$ 900,000 \\\text { Equity } & & \\\hline\end{array}$ Beta Corp.
Consolidated Income Statement,
For the year ended December 31, 2020
$\begin{array}{|l|r|r|}\hline \text { Sales } & & \$ 500,000 \\\hline \text { Cost of sales } & \$115,000 \\\hline \text { Depreciation } & \$ 30,000 \\\hline \text { Interest expense } & \$ 50,000 \\\hline \text { Gain on land sale } & (\$ 10,000) \\\hline& & (\$ 185,000) \\\hline \text { Net income } & & \$ 315,000 \\\hline \text { Attributable to: } & & \\\hline \text { Shareholders of Parent } & &\$ 300,000 \\\hline \text { Non-Controlling Interest } & &\$ 15,000 \\\hline\end{array}$ Other Information:
Beta purchased its interest in Gamma on January 1, 2016 for $360,000 when the company's net assets were valued at $300,000. The acquisition differential was allocated equally between goodwill and equipment, which was estimated to have a remaining useful life of ten years from the acquisition date.
Gamma reported a net income of $75,000 and paid dividends of $5,000 during 2020.
Beta issued $300,000 in bonds during the year. Beta reported an equity method net Income of $300,000 and paid $70,000 in dividends to its shareholders.
Required:
Prepare a Consolidated Statement of Cash Flows for Beta Corp. for 2020.
Beta Corp.
Consolidated Statement of Cash Flows

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