Reporting Land Transactions on A summary of the cash receipts and cash payments

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 $145,000 124,000 993,000

Item

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.

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