Red Manufacturing Company owns 40% of the outstanding common stock of Blue Supply Company.During 2016,Red received a $50 million cash dividend from Blue.What effect did this dividend have on Red's 2016 statement of cash flows?

Question

Quizplus · Accepted Answer

The dividend received by Red Manufacturing Company from Blue Supply Company is considered cash inflow from operating activities, thus increasing cash from operating activities.

Red Manufacturing Company Owns 40% of the Outstanding Common Stock