Question

Land Transactions on the Statement of Cash Flows

Alpha Corporation purchased land for $308,000. Later in the year, the company sold a different piece of land with a book value of $179,000 for $204,000.

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 land		$

Answer 1

Ans.	Transactions	Action	Amount
	Gain or loss on sale of land	Gain is deducted from Net income in Operating activities	-$25,000
	Cash received from sale of land	Cash inflow transaction of Investing activities	$204,000
	Cash paid for purchase of land	Cash outflow transaction of Investing activities	-$308,000
	*Gain on sale of land = Selling price - Book value
	$204,000 - $179,000   =   $25,000
	*Non cash & Non operating income (gain on sale of land) are deducted from Net income.
	*Sale (inflow) or purchase (outflow) transation of property, plant and equipment are listed
	in Investing activities section of cash flow statement.