Mario Company is an 80% owned subsidiary of Lois Company. The interest in Mario is purchased on January 1, 2011, for $680,000 cash. The fair value of the NCI was $170,000. At that date, Mario has...

Mario Company is an 80% owned subsidiary of Lois Company. The interest in Mario is purchased on January 1, 2011, for $680,000 cash. The fair value of the NCI was $170,000. At that date, Mario has stockholders’ equity of $650,000. The excess price is attributed to equipment with a 5-year life undervalued by $25,000 and to goodwill. The following comparative consolidated trial balances apply to Lois Company and its subsidiary, Mario: The 2012 information shown on page 364 is available for the Lois and Mario companies. a. Mario purchases equipment for $70,000. b. Mario issues $350,000 of long-term bonds and later uses the proceeds to purchase a new building. c. On January 1, 2012, Lois purchases 30% of the outstanding common stock of Charles Corporation for $230,000. This is an influential investment. Charles’s stockholders’ equity is $700,000 on the date of the purchase. Any excess cost is attributed to equipment with a 10-year life. Charles reports net income of $80,000 in 2012 and pays dividends of $25,000. d. Controlling share of consolidated income for 2012 is $262,000; the non-controlling interest in consolidated net income is $15,000. Lois pays $100,000 in dividends in 2012; Mario pays $15,000 in dividends in 2012. Required Prepare the consolidated statement of cash flows for 2012 using the indirect method. Any supporting calculations (including a determination and distribution of excess schedule) should be in good form. View Solution:

Mario Company is an 80 owned subsidiary of Lois Company