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

Exercise 7

Cash flow, issue stock, year of purchase. Duckworth Corporation purchases an 80% interest in Panda Corporation on January 1, 2013, in exchange for 5,000 Duckworth shares (market value of $18) plus $155,000 cash. The fair value of the NCI is proportionate to the price paid by Duckworth for its interest. The appraisal shows that some of Panda's equipment, with a 4-year estimated remaining life, is undervalued by $20,000. The excess is attributed to goodwill. Panda Corporation's balance sheet on December 31, 2012 is shown on page 360.
The following information relates to the activities of the two companies for 2013:
a. Panda pays off $10,000 of its long-term debt.
b. Duckworth purchases production equipment for $76,000.
c. Consolidated net income is $103,200; the NCI's share is $5,000. Depreciation expense taken by Duckworth and Panda on their separate books is $92,000 and $28,000, respectively.
d. Duckworth pays $30,000 in dividends; Panda pays $15,000.
Prepare the consolidated statement of cash flows for the year ended December 31, 2013, for Duckworth Corporation and its subsidiary, Panda Corporation.