Question

Land Transactions on the Statement of Cash Flows Alpha Corporation purchased land for $211,000. Later in the year, the company sold a different piece of land with a book value of $93,000 for $101,000. How are the effects of these transactions reported on the statement of cash flows? Use the minus sign to indicate cash outflows, 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 Deducted from net income $ -8,000 Cash received from sale of land Part of cash flows from investing activities $ Cash paid for purchase of land Part of cash flows used for investing activities $

Answer 1

Answer:

investing activities:

acquisition of land   (211,000)

sale of land              (101,000)

Operating Activities:

gain on sale: NO EFFECT if direct method is used

                adjusting the net income if the indirect method is used.

Explanation:

The cash disbursmenets and cash proceeds fro mthe purhcase and sale of land respectevely will appear as investing activities.

The gain on the sale will adjust the net incoem if the company used indirect method to determinatethe cash from operating activities.

As is a non-monetary term It will be removed.

If the company used the direct method there will be no mention to the gain on sale.