Question

Carter Containers sold marketable securities, land, and common stock for $30 million, $15 million, and $40 million, respectively. Carter also purchased treasury stock, equipment, and a patent for $21 million, $25 million, and $12 million, respectively. What amount should Carter report as net cash from investing activities?

Answer 1

Answer:

The $8 million is the amount which should Carter report as net cash from investing activities.  

Explanation:

Cash flow from investing activities : It includes all types of transactions whether it is a sale or purchase of fixed assets and intangible assets.

So, the net cash flow amount from investing activities is equals to

= Sale of marketable securities + Sale of land - Purchase of equipment - purchase of patent

= $30 million + $15 million - $25 million - $12 million

= $8 million

The sale of common stock and purchase of treasury stock is a part of financing activities. Hence, it is not considered in the computation part.

Thus, the $8 million is the amount which should Carter report as net cash from investing activities.