Marion Company is an 80 owned subsidiary of Lange

Company #6233
Marion Company is an 80% owned subsidiary of Lange Company. The interest in Marion is
purchased on January 1, 2015, for $680,000 cash. The fair value of the NCI was $170,000. At
that date, Marion has stockholders' equity of $650,000. The excess price is attributed to
equipment with a 5-year life undervalued by $50,000 and to goodwill. The following comparative
consolidated trial balances apply to Lange Company and its subsidiary, Marion:The 2016
information shown on page 362 is available for the Lange andMarion companies.a. Marion
purchases equipment for $70,000.b. Marion issues $350,000 of long-term bonds and later uses
the proceeds to purchase a new building.c. On January 1, 2016, Lange 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
2016 and pays dividends of $25,000.d. Controlling share of consolidated income for 2016 is
$262,000; the noncontrolling interest in consolidated net income is $15,000. Lange pays
$100,000 in dividends in 2016; Marion pays $15,000 in dividends in 2016.RequiredPrepare the
consolidated statement of cash flows for 2016 using the indirect method. Any supporting
calculations (including a determination and distribution of excess schedule) should be in good
form.View Solution:
Marion Company is an 80 owned subsidiary of Lange Company

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