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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Jordan Company recognized a $5,000 unrealized holding gain on investment in Starbucks’s common stock during 2019. The company classified as equity investments. How would this information be reported in a statement of cash flows prepared using the indirect method?

To determine

Explain the recording of unrealized gain on investment as equity investments in cash flow statement under indirect method.

Explanation

Statement of cash flows: Statement of cash flow reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

Equity investment: Money that is invested in a firm by its owner(s) or holder(s) of common stock (ordinary shares) but which is not returned in the normal course of the business...

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