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Exercise 21-16 (Algo) Equity method investment; statement of cash flow effects [LO21-3, 21-5] On January 1,...

Exercise 21-16 (Algo) Equity method investment; statement of cash flow effects [LO21-3, 21-5] On January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $450.0 million cash. Wolfe’s net income for the year ended December 31, 2021, was $225.0 million. During 2021, Wolfe declared and paid cash dividends of $45.0 million. Beilich recorded the investment as follows: ($ in millions) Purchase Investment in Wolfe Construction shares 450.0 Cash 450.0 Net income Investment in Wolfe Construction shares (20% × $225.0 million) 45.0 Investment revenue 45.0 Dividends Cash (20% × $45.0 million) 9.0 Investment in Wolfe Construction shares. 9.0 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 rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Cash outflows should be indicated by a minus sign.)

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Answer #1

Given data follows bellow:

Investment in Wolfe Construction shares.

Investment in Wolfe Construction shares = (20% × $225.0 million) 45.0 I

Investment revenue 45.0 Dividends Cash =(20% × $45.0 million) 9.0
Operating or Managing activities

-Return or shares redeemed for $9 million will rise or higher price or rate or value flow or stream or outflow from operating activities.


Investing or Funding or Financing activities

-Money or amount or fund spent or paid for the Purchase in Wolfe Construction shares for $(450) million will decrease or lessen the money or amount flow from investing Funding or Financing activities.

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