New Life Corporation has just finished preparing a consolidated balance sheet,income statement,and statement of changes in retained earnings for 2009.The following items are proposed for inclusion in the consolidated cash flow statement:
New Life holds 75 percent of the voting stock of Shane Pharmaceuticals,acquired at book value on June 21,2006.On the date of the acquisition,the fair value of the noncontrolling interest was equal to 25 percent of the book value of Shane.

-Based on the preceding information,what was the change in cash balance for the consolidated entity for 2009?
A)Decrease of $153,000
B)Increase of $450,000
C)Increase of $293,000
D)Increase of $150,000

Question

New Life Corporation has just finished preparing a consolidated balance sheet,income statement,and statement of changes in retained earnings for 2009.The following items are proposed for inclusion in the consolidated cash flow statement:
New Life holds 75 percent of the voting stock of Shane Pharmaceuticals,acquired at book value on June 21,2006.On the date of the acquisition,the fair value of the noncontrolling interest was equal to 25 percent of the book value of Shane.
 
-Based on the preceding information,what was the change in cash balance for the consolidated entity for 2009?
A)Decrease of $153,000 
B)Increase of $450,000 
C)Increase of $293,000 
D)Increase of $150,000

Quizplus · Accepted Answer

In order to calculate the change in cash balance for the consolidated entity, we need to prepare the consolidated cash flow statement. However, the given question only provides information regarding the acquisition of a subsidiary in 2006, but no information regarding the cash flows for 2009. Thus, we cannot accurately determine the change in cash balance for 2009 based solely on the information given. Therefore, we cannot choose any of the given choices.

New Life Corporation Has Just Finished Preparing a Consolidated Balance