Land Transactions on the Statement of Cash Flows Alpha Corporation purchased lan
ID: 2474437 • Letter: L
Question
Land Transactions on the Statement of Cash Flows
Alpha Corporation purchased land for $461,000. Later in the year, the company sold a different piece of land with a book value of $184,000 for $204,000.
How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank.
Transactions Action Amount Gain or loss on sale of land No effectAdded to net incomeDeducted from net incomePart of cash flows from financing activities Part of cash flows from investing activities $ Cash received from sale of land No effectAdded to net incomeDeducted from net incomePart of cash flows from financing activities Part of cash flows from investing activities $ Cash paid for purchase of land No effectAdded to net incomeDeducted from net incomePart of cash flows from financing activities Part of cash flows from investing activities $Explanation / Answer
1. Gain or loss on sale of land: $ 20,000 increase in opearting cash flows
2. Cash received on sale of land: Cash in financing increases by $ 204,000
3. cash paid for purchase of land: Cash in financing reduces by $ 461,000
Net Cash floww effect: $ 20,000 + $204,000 - $ 461,000 = (237,000)
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