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Managerial Accounting: The Corners...
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Managerial Accounting: The Corners...
During the year, Swasey Company sold equipment with a book value of $560,000 for $760,000 (original purchase cost of $960,000). New equipment was purchased.
Swasey provided the following comparative balance sheets:
Required:
Calculate the investing cash flows for the current year.
Compute the investing cash flows for the current year.
Cash Flows from Investing Activities:
This category of a cash flow statement shows the investing activities which involves the purchase or sale of long-term assets. This includes acquiring new asset or acquiring stock in another company.
The calculation of investing cash flows for the current year is shown in table below:
| S Company | |
| Cash Flow Statement | |
| Investing Cash Flows: | |
| Particulars | Amount ($) |
| Sale of equipment | 760,000 |
| Purchase of equipment1 | (860,000) |
| Purchase of land2 | (875,000) |
| Net cash from investing activities | (975,000) |
Table (1)
Therefore, net cash flow from investing activities is $(975,000).
Working Note:
1.
Calculation of purchase value of equipment:
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