![Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only](https://www.bartleby.com/isbn_cover_images/9781337541398/9781337541398_largeCoverImage.gif)
Concept explainers
Statement of
Cash flows from operating activities: These are the cash produced by the normal business operations.
Indirect method: Under this method, the following amounts are to be adjusted from the Net Incometo calculate the net cash provided from operating activities.
Cash flows from operating activities (Indirect method) |
Add: Decrease in current assets |
Increase in current liability |
Depreciation expense and amortization expense |
Loss on sale of plant assets |
Deduct: Increase in current assets |
Decrease in current liabilities |
Gain on sale of plant assets |
Net cash provided from or used by operating activities |
The below table shows the way of calculation of cash flows from operating activities:
Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.
Cash flows from investing activities |
Add: Proceeds from sale of fixed assets |
Sale of marketable securities / investments |
Interest received |
Dividend received |
Deduct: Purchase of fixed assets/long-lived assets |
Purchase of marketable securities |
Net cash provided from or used by investing activities |
The below table shows the way of calculation of cash flows from investing activities:
To Explain: The effect of the given transactions reported on the statement of cash flows.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 13 Solutions
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
- Land Transactions on the Statement of Cash Flows Veteran Corporation purchased land for $472,000. Later in the year, the company sold a different piece of land with a book value of $217,000 for $237,000. How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank. Transactions Action Amount Gain or loss on sale of land $ Cash received from sale of land $ Cash paid for purchase of land $arrow_forwardLand Transactions on the Statement of Cash Flows IZ Corporation purchased land for $500,000. Later in the year, the company sold a different piece of land with a book value of $250,000 for $280,000. How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank. Transactions Action Amount Gain on sale of land Cash received from sale of land $ Cash paid for purchase of landarrow_forwardLand Transactions on the Statement of Cash Flows IZ Corporation purchased land for $500,000. Later in the year, the company sold a different piece of land with a book value of $250,000 for $280,000. How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank. Transactions Action Amount Gain on sale of land Deducted from net income $fill in the blank 2 Cash received from sale of land Part of cash flows from investing activities $fill in the blank 4 Cash paid for purchase of land Part of cash flows from investing activities Changes in Current Operating Assets and Liabilities—Indirect Method Mohammed Corporation's comparative balance sheet for current assets and…arrow_forward
- Land Transactions on the Statement of Cash Flows Cameron Corporation purchased land for $206,000. Later in the year, the company sold a different piece of land with a book value of $124,000 for $140,000. How are the effects of these transactions reported on the statement of cash flows? Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank. Transactions Action Amount Gain or loss on sale of land Cash received from sale of land Cash paid for purchase of landarrow_forwardReporting Land Transactions on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 802,000 Mar. 12 Purchased for cash 257,000 1,059,000 Oct. 4 Sold for $141,000 121,000 938,000 Item Section of Statement ofCash Flows Added or Deducted Amount Mar. 12: Purchase of fixed asset $fill in the blank 3 Oct. 4: Sale of fixed asset $fill in the blank 6 Gain on sale of fixed asset (assume the indirect method) $fill in the blank 9arrow_forwardIf Marigold Imports Corporation realizes a gain of $96000 on a cash sale of a building having a book value of $708000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is $612000. $708000. $804000. $96000.arrow_forward
- Reporting Land Transactions on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 919,000 Mar. 12 Purchased for cash 276,000 1,195,000 Oct. 4 Sold for $152,000 130,000 1,065,000 Item Section of Statement ofCash Flows Added or Deducted Amount Mar. 12: Purchase of fixed asset $ Oct. 4: Sale of fixed asset $ Gain on sale of fixed asset (assume the indirect method) $arrow_forwardReporting Land Acquisition for Cash and Mortgage Note on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 272,900 Feb. I 10 Purchased for cash 393,000 665,900 Nov. 20 Purchased with long-term mortgage note 539,400 1,205,300 Item Section of Statement of Cash Flows Added or Deducted Amount Purchase of land for cash Investing activities section Deducted Purchase of land by issuing long-term mortgage note Financing activities section Investing activities section Operating activities section Separate schedulearrow_forwardOn the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: Date Item Debit Credit BalanceDebit BalanceCredit January 1 Balance 319,900 February 10 Purchased for cash 499,000 818,900 November 20 Purchased with long-term mortgage note 663,300 1,482,200 Item Section of Statement of Cash Flows Added or Deducted Amount Purchase of land for cash $fill in the blank 3 Purchase of land by issuinglong-term mortgage note $fill in the blank 6arrow_forward
- On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: Date Item Debit Credit BalanceDebit BalanceCredit January 1 Balance 1,131,000 March 12 Purchased for cash 385,000 1,516,000 October 4 Sold for $211,000 181,000 1,335,000 Item Section of Statement ofCash Flows Added or Deducted Amount March 12: Purchase of fixed asset $fill in the blank 3 October 4: Sale of fixed asset $fill in the blank 6 Gain on sale of fixed asset (assume the indirect method) $fill in the blank 9arrow_forwardCameron Corporation purchase land for $434,000. Later in the year, the company sold a different piece of land with a book value of $182,000 for $202,000. How are the effects of these transactions Reported on the statement of cash flow is assuming the indirect method is used?arrow_forwardReporting Land Acquisition for Cash and Mortgage Note on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Jan. 1 Balance 256,200 Feb. 10 Purchased for cash 389,400 645,600 Nov. 20 Purchased with long-term mortgage note 522,900 1,168,500 Item Section of Statement of Cash Flows Added or Deducted Amount Purchase of land for cash Purchase of land by issuing long-term mortgage notearrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)