On January 2, 2021, Miller Properties paid $33 million for 1 million shares of Marlon Company's 6 million outstanding common sha

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On January 2, 2021, Miller Properties paid $33 million for 1 million shares of Marlon Company's 6 million outstanding common sha

res. Miller's CEO became a member of Marlon's board of directors during the first quarter of 2021. The carrying amount of Marlon's net assets was $142 million. Miller estimated the fair value of those net assets to be the same except for a patent valued at $30 million above cost. The remaining amortization period for the patent is 10 years. Marlon reported earnings of $69 million and paid dividends of $3 million during 2021. On December 31, 2021, Marlon's common stock was trading on the NYSE at $32.50 per share.
Required: 2. Assume Miller accounts for its investment in Marlon using the equity method. Ignoring income taxes, determine the amounts related to the investment to be reported in its 2021. (Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal places, (i.e., 5,500,000 should be entered as 5.5).): million million a. Income statement b. Balance sheet c. Statement of cash flows Operating cash flow Investing cash flow million million

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1 answer:

GuDViN [60] · Answer 1 · 2023-05-18T17:15:58+03:00

Based on the balances given by Miller Properties, the amounts in the relevant accounts are:

Income statement = $11 million.
Balance sheet = $43.5 million.
Statement of cashflows operating cash flow = $500,000.
Statement of cashflows investing cash flow = $33 million.

<h3>What is the income statement balance?</h3>

= (Reported earnings - (Patent value / Number of years) ) / Marlon company outstanding shares

= (69 - (30 / 10) ) / 6

= $11 million

<h3>What is the balance sheet balance?</h3>

= Acquisition price + Equity income - Dividends declared by Marlon

= 33 + 11 - (3/6)

= $43.5 million

<h3>What is the operating cash flow ?</h3>

This is the cash dividend that Miller received from Marlon of:
= 3 / 6 million shares x 1 million

= $500,000

<h3>What is the investing cash flow?</h3>

This is the $33 million that Miller paid for Marlon company shares.

Find out more on operating cashflow at brainly.com/question/25530656.