Reference no: EM133188322

Question - On February 1, 2019, Wildcat bought 3,000 common shares of McCormick for $30,000 cash. McCormick has 10,000 shares outstanding. Wildcat accounts for these securities using the equity method. The share price of McCormick closed at $12 on December 31, 2019 and at $15 on December 31, 2020. Wildcat received $9,000 cash dividends from McCormick on April 1, 2019 and $6,000 cash dividends from McCormick on April 1, 2020.  In addition, McCormick reported Net Income of $50,000 for 2019 and Net Income of $40,000 for 2020. On January 1, 2020, Wildcat sold 500 shares of McCormick for $7,000. Assume that both companies close their books on December 31.

What is the adjustment (to the net income) in the operating section of the cash flow statement prepared under the indirect method for 2019 related to Wildcat's equity investment in McCormick?  Hint: If multiple items would affect such adjustments, then provide the sum effect of such multiple items as your answer below.  Input a positive number if the adjustment is to add back to net income and a negative number if the adjustment is to subtract from net income.