On July 15, 2016, M.W. Morgan Distribution sold land for $55.5 million that it h

Question

On July 15, 2016, M.W. Morgan Distribution sold land for $55.5 million that it had purchased in 2011 for $40.0 million.

What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2016, using the direct method? (List any cash outflows with a minus sign. Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

On July 15, 2016, M.W. Morgan Distribution sold land for $55.5 million that it had purchased in 2011 for $40.0 million.

Explanation / Answer

Cash 55.5

Land (cost) 40

Gain on sale of land (difference) 15.5

Morgan would report the cash inflow of $55.5 million from the saleas a cash inflow from investing activities in its statement of cashflows.The $15.5 million gain is not a cash flow and would not be reported when using the direct method.

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