n January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $600 million cash. Wolfe’s net income for the year ended December 31, 2021, was $300 million. During 2021, Wolfe declared and paid cash dividends of $60 million. Beilich recorded the investment as follows: ($ in millions)Purchase Investment in Wolfe Construction shares600 Cash 600 Net income Investment in Wolfe Construction shares (20% x $300 million)60 Investment revenue 60 Dividends Cash (20% × $60 million)12 Investment in Wolfe Construction shares. 12 Required:What would be the pretax amounts related to the investment that Beilich would report in its statement of cash flows for the year ended December 31, 2021? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated by a minus sign.)

The cash flow statement (CFS), sometimes known as the statement of cash flows, is a financial…

Answered: January 1, 2021, Beilich Enterprises…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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Question

n January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $600 million cash. Wolfe’s net income for the year ended December 31, 2021, was $300 million. During 2021, Wolfe declared and paid cash dividends of $60 million. Beilich recorded the investment as follows:

	($ in millions)
Purchase
Investment in Wolfe Construction shares	600
Cash		600

Net income
Investment in Wolfe Construction shares (20% x $300 million)	60
Investment revenue		60

Dividends
Cash (20% × $60 million)	12
Investment in Wolfe Construction shares.		12

Required:
What would be the pretax amounts related to the investment that Beilich would report in its statement of cash flows for the year ended December 31, 2021? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated by a minus sign.)

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