On January 1, 2012, Hanson Inc would Hanson's January 1, 2013 purchase have on the company's consolidated cash flows for the year?

Question

Quizplus · Accepted Answer

The purchase of 80% of the outstanding common stock of Hanson Inc. on January 1, 2013, would result in a decrease in cash of $45,000 to the consolidated entity. This is because Hanson Inc. would be consolidated into the financial statements of the parent company, and the parent company would record an investment in Hanson Inc. for the purchase price of $200,000. The parent company would also record a goodwill of $36,000, which would be an increase to the consolidated equity. The net effect of these transactions would be a decrease in cash of $45,000.

On January 1, 2012, Hanson Inc Would Hanson's January 1