Reporting Land Transactions on A summary of the cash receipts and cash payments
ID: 2466743 • Letter: R
Question
Reporting Land Transactions on A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.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:
Item
Apr. 6: Purchase of fixed asset $
Nov. 23: Sale of fixed asset $
Gain on sale of fixed asset (assume the indirect method) $
ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 2016 Jan. 1 Balance 853,000 Apr. 6 Purchased for cash 264,000 1,117,000 Nov. 23 Sold for $145,000 124,000 993,000Item
Apr. 6: Purchase of fixed asset $
Nov. 23: Sale of fixed asset $
Gain on sale of fixed asset (assume the indirect method) $
Explanation / Answer
Cash flows from investing activities:
Cash received from sale of land $145,000
Less: Cash paid for purchase of land $264,000
The gain on the sale of land, $21,000 ($145,000 - $124,000), would be deducted from net income in determining the cash flows from operating activities if the indirect method of reporting cash flows from operations is used.