Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 1

Cash flow, cash payment, year of acquisition. Banner Company acquires an 80% interest in Roller Company for $640,000 cash on January 1, 2013. The NCI has a fair value of $160,000. Any excess of cost over book value is attributed to goodwill. To help pay for the acquisition, Banner Company issues 5,000 shares of its common stock with a fair value of $70 per share. Roller's balance sheet on the date of the purchase is as follows:
Controlling share of net income for 2013 is $150,000, net of the noncontrolling interest of $10,000. Banner declares and pays dividends of $10,000, and Roller declares and pays dividends of $5,000. There are no purchases or sales of property, plant, or equipment during the year. Based on the following information, prepare a statement of cash flows using the indirect method for Banner Company and its subsidiary for the year ended December 31, 2013. Any supporting schedules should be in good form.