Gioia company acquired some of the 65,000 shares of outstanding common stock (no par) of Tristezza corporation during 2011 as a long-term investment. The annual accounting period for both companies ends decemeber 31. The following transactions occured during 2011
Jan 10. Purchased 17,875 shares of Tristezza common stock at $11 per share
Dec 31. (the following)
a.Received the 2011 financial statmenets of tritezza corporation that reported net income of 80,000
b. Tristezza corp. declared and paid a cash divdidend of $0.60 per share.
c. Determined the market price of Tristezza stock to be $10 per share
Questions:
1. On the current year cash flow statement, how would the investing section of the statement be affected by the precedding transactions?
2.On the current year cash flow statement (indirect method) how would the equity in the earnings of the affiliated company and the dividends from the affiliated company affect the operating section? Explain?