Long -Term Assets on the Statement of cash flows-Indirect Method The following a

Question

Long -Term Assets on the Statement of cash flows-Indirect Method

The following account balances are taken from the records of Martin Corp, for the past two years. (Credit balances are shown in parentheses.)

December 31
___________
2010 2009
__________________________________________________________________________
Plant and Equipment $750.000 $500,000
Accumulated depreciation (160,000) (200,000)
Patents 92,000 80,000
Retained earnings (825,000) (675,000)

a. Net income for the year was $200,000.
b. Depreciation expense on plant and equipment was $50,000.
c. Plant and equipment with an original cost of $150,000 were sold for $64,000. (You will need to determine the book value of the assets sold.)
d. Amortization expense on patents was $8,000.
e. Both new plant and equipment and patents were purchased for cash during the year.

I am having trouble indicating with amounts how all items related to these long-term assets would be reported in the 2010 statement of cash flows, including any adjustments in the Operating Activities section of the statement. Martin uses the indirect Method

Explanation / Answer

Cash flows from operating activities Net Income 200,000 Adjustments: (Gain) on disposal of property and equipment (14,000) Depreciation and amortization 58,000 Net cash provided by operating activities 244,000 Cash flows from investing activities Proceeds from sale of equipment 64,000 Capital expenditures (400,000) Purchase of intangible assets (20,000) Net cash used in investing activities (356,000)

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