Pursley, Inc. owns 70 percent of Harry Corp. The consolidated income statement for a year reports...
Pursley, Inc. owns 70 percent of Harry Corp. The consolidated
income statement for a year reports $50,000 Noncontrolling Interest
in Harry Corp.'s Net Income. Harry paid dividends in the amount of
$80,000 for the year. What are the effects of these transactions in
the consolidated statement of cash flows for the year?
| Financing Activities | Operating Activities | |
| A) | Increased by $24,000 | Increased by $15,000 |
| B) | Decreased by $15,000 | Unaffected |
| C) | Unaffected | Decreased by $15,000 |
| D) | Decreased by $24,000 | Unaffected |
| E) | Unaffected | Increased by $24,000 |
Homework Answers
Answer:
| D) | Decreased by $24,000 | Unaffected |
The dividend paid would get reduced to the extent of the controlling interest of 80000*70% = $56000. So cash outflow = 80000-56000 = $24,000 under financing activities.
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