Question

During 2020, Blaine Company sold a building with a book value of $145,000 for proceeds of $175,000. The company also sold long-term investments for proceeds of $32,000. The company purchased land and a new building for $320,000 by signing a long-term note payable. No other transactions impacted long-term asset accounts during 2020. Net cash inflows from investing activities this period are $207,000 True O False

Answer 1

Solution :

Statement showing net cash inflows from Investing Activities for the period
Particulars	Amount
A. Sale of building	$                  175,000.00
B.Sale of long term investments	$                      32,000.00
Net cash inflows from Investing Activities = A + B	$                    207,000.00

The net cash inflows from Investing Activities this period is = $ 207,000

The statement is True.

The solution is Option 1 = True

Note :

1. Purchase of land and new building for $ 320,000 by signing a long – term note payable does not involve any cash outflow as the amount due on the long – term note payable will be paid at a later date when the note payable falls due.

2. When the long term note payable is paid at a later date, the cash outflow shall be treated as a cash outflow under financing activities.