Determine cash flow effects of changes in plant asset accounts . (LO 4), AN The

Question

Determine cash flow effects of changes in plant asset accounts.

(LO 4), AN

The following selected account balances relate to the plant asset accounts of Lazari Inc. at year-end.

2014

2013

Additional information:

1.  

2.  

3.  

Instructions

Determine the amounts of any cash inflows or outflows related to the plant asset accounts in 2014.

Cash proceeds $5,000

Indicate where each of the cash inflows or outflows identified in (a) would be classified on the statement of cash flows.

2014

2013

Accumulated depreciation—buildings $337,500 $300,000 Accumulated depreciation—equipment 144,000 96,000 Buildings 750,000 750,000 Depreciation expense 99,500 85,500 Equipment 300,000 240,000 Land 120,000 70,000 Loss on disposal of plant assets 6,000 0

Explanation / Answer

Solution :

a..

cash flow

$

Purchase of equipment

-85000

Purchase of Land

-50000

sale of land

5000

cash flow

-130000

b..

$

Classification in cash flow statement

Purchase of equipment

-85000

Investing activities

Purchase of Land

-50000

Investing activities

sale of land

5000

Investing activities

cash flow

-130000

cash flow

$

Purchase of equipment

-85000

Purchase of Land

-50000

sale of land

5000

cash flow

-130000

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