Question

Reporting Land Transactions on 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:

ACCOUNT Land									ACCOUNT NO.
									Balance
Date			Item		Debit		Credit		Debit		Credit
Jan.	1			Balance					1,133,000
Mar.	12			Purchased for cash	385,000				1,518,000
Oct.	4			Sold for $211,000			181,000		1,337,000

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
Mar. 12: Purchase of fixed asset			$
Oct. 4: Sale of fixed asset			$
Gain on sale of fixed asset (assume the indirect method)			$

Answer 1

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
Mar. 12: Purchase of fixed asset	Investing	Deducted	$3,85,000.00
Oct. 4: Sale of fixed asset	Investing	Added	$181,000.00
Gain on sale of fixed asset (assume the indirect method)	Operating	Added	$   30,000.00

Loss on sale of Asset (211000-181000) $30000 is a loss which is adjusted with net income in operating section in cash flow statement as this loss is not a cash expense.