MacDonald, Inc. owns 80% of the outstanding stock of Stahl Corporation. During the current year, Stahl made $125,000 in sales to MacDonald. How does this transfer affect the consolidated statement of cash flows?
A) Include 80% as a decrease in the investing section.
B) Include 100% as a decrease in the investing section.
C) Include 80% as a decrease in the operating section.
D) Include 100% as an increase in the operating section.
E) Not reported in the consolidated statement of cash flows.

Question

Quizplus · Accepted Answer

Intercompany sales are eliminated in consolidation, so they do not affect the consolidated statement of cash flows.