Aqua Pools Inc. had the following activity in its most recent year of operations

Question

Aqua Pools Inc. had the following activity in its most recent year

of operations.

(a) Purchase of delivery truck.                              (g) Purchase of treasury stock.

(b) Issuance of bonds payable.                              (h) Gain on sale of equipment.

(c) Sale of investments for no gain or loss.            (i) Goodwill impairment.

(d) Amortization of intangible assets.                     (j) Payment of dividends.

(e) Conversion of bonds into stock.                       (k) Sale of treasury stock.

(f) Exchange of building for land.                          (l) Decrease in interest payable on note payable.

Instructions

Classify the items as (1) operating—add to net income; (2) operating—deduct from net income;

(3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method.

Explanation / Answer

Serial no Classification Operating—add to net income Operating—deduct from net income d) Amortization of intangible assets i) Goodwill impairment Investing a) Purchase of delivery truck c) Sale of investments for no gain or loss g) Purchase of treasury stock h) Gain on sale of equipment k) Sale of treasury stock Financing b) Issuance of bonds payable j) Payment of dividends Significant noncash investing and financing activities e) Conversion of bonds into stock f) Exchange of building for land l) Decrease in interest payable on note payable.

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