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
Date			Item		Debit		Credit		Debit		Credit
Jan.	1			Balance					974,000
Mar.	12			Purchased for cash	331,000				1,305,000
Oct.	4			Sold for $182,000			156,000		1,149,000

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
Mar. 12: Purchase of fixed asset			$
Oct. 4: Sale of fixed asset			$
Gain on sale of fixed asset (assume the indirect method)			$

Answer 1

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
				Mar. 12: Purchase of fixed asset	Investing activities	Deducted	$331,000
Oct. 4: Sale of fixed asset	Investing activities	Added	$182,000
Gain on sale of fixed asset (assume the indirect method)	Operating Activities	Deducted	$26,000

Gain on sale of fixed assets = Sale price - Book value

= 182,000-156,000

= $26,000

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