Reporting Land Transactions on Statement of Cash Flows On the basis of the detai

Question

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 Debit Credit Debit Credit Date Item Jan. 1 Balance Mar 12Purchased for cash405,000 Oct. 4Sold for $222,000 1,227,000 1,632,000 190,000 1,442,000 Section of Statement of Item Added or Deducted Amount Cash Flows Mar. 12: Purchase of fixed asset Oct. 4: Sale of fixed asset Gain on sale of fixed asset (assume the indirect method)

Explanation / Answer

Effect of items on cash flow statement is as shown below:

Item Section of statement of cash flow Added or deducted Amount Mar 12: Purchase of fixed asset Investing activities Deducted 405,000 Oct 4: Sale of fixed asset Investing activities Added 222,000 Gain on sale of fixed asset (assume the indirect method) Operating activities Deducted 32000

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