Line within the investing cash flow section of our

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line within the investing cash flow section of our consolidated statement of cash flows. At the time of disposition, Syncrude had a net carrying value of $1.75 billion, which included $1.97 billion of properties, plants and equipment. During 2010 until its disposition, Syn- crude contributed $327 million in intercompany sales and other operating revenues, and generated income before taxes of $127 million and net income of $93 million for the E&P segment. L03 Describeand interpret accounting for equity carve-outs and convertible debt.
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8-25 Module 8 I Equity Recognition and Owner Financing A spin-off is a second form of divestiture. In this case, the parent company distributes the subsi iary shares that it owns as a dividend to its shareholders who, then, own shares in the subsidi _ directly rather than through the parent company. In recording this dividend, the parent comp _ reduces retained earnings by the book value of the equity method investment, thereby rernovins the investment in the subsidiary from the parent's balance sheet. The spin-off of the Kraft Foods subsidiary by Altria is an example of this type of eq carve-out. Altria describes its spin-off of Kraft as follows: The financial statement effects of this transaction follow: Conoco received $4.6 billion in cash, which it reported as a component of cash flows from investing activities in its statement of cash flows. The Syncrude joint venture was reported on Conoco's balance sheet at $1.75 billion on the date of sale. Conoco's gain on sale equaled the proceeds ($4.6 billion) less the carrying amount of the busi- ness sold ($1.75 billion), or $2.85 billion which Conoco rounds to $2.9 billion in the footnoe referenced above. Conoco subtracts the gain on sale in computing net cash flows from operating activities remove the gain from net income; cash proceeds are reported as a cash inflow in the inve ing section. Spin-Offs Kraft Spin-Off On March 30, 2007 (the "Kraft Distribution Date"), Altria Group, Inc. distributed all of its remaining interest in Kraft on a pro-rata basis to Altria Group, Inc. stockholders of record as of the close of business on March 16, 2007 (the "Kraft Record Date") in a tax-free distribution. The distribution ratio was 0.692024 of a share of Kraft for each share of Altria Group, Inc. common stock outstanding. Altria Group, Inc. stockholders received cash in lieu of fractional shares of Kraft. Following the distribution, Altria Group, Inc. does not own any shares of Kraft. Altria treats the distribution of its Kraft shares as a dividend, which Altria reports in the follow: _ excerpt from its statement of stockholders' equity. Accumulated Other Comprehensive Earnings (Losses) Earnings Additional Reinvested Currency Cost of Common Paid-in in the Translation Repurchased millions, except per share) Stock Capital Business Adjustments Other Total Stock Balances, December 31, 2006 ...... ••..• .
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