Question

The action options are:

Land Transactions on the Statement of Cash Flows Alpha Corporation purchased land for $473,000. Later in the year, the company sold a different piece of land with a book value of $298,000 for $268,000. How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash out flows, 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

No Effect

Added to Net Income

Deducted from Net Income

Part of Cash Flows from financing activities

Part of Cash Flows from investing activities

Please tell which action would go with which transaction and the amounts.

Answer 1

Solution

Transaction Action Amount

Gain or Loss on sale of land Added to net income $30,000 ($298,000-$268,000)

Cash received from sale of land Part of cash flow from investing activities $268,000

Cash paid from purchase of land Part of cash flow from investing activities $473,000