Question

Brief Exercise 11-8 Calculate net cash flows from investing activities (LO11-4) Creative Sound Systems sold investments, land, and its own common stock for $40 million, $16 million, and $42 million, respectively. Creative Sound Systems also purchased treasury stock, equipment, and a patent for $22 million, $26 million, and $13 million, respectively. What amount should the company report as net cash flows from investing activities?

Answer 1

Answer: $17,000,000

Explanation:

Investing Activities in the Cash Flow Statement refers to any cash inflows or outflow that is related to investments as well as the fixed assets and securities of other companies and patents.

In the above question the following are considered investment activities,

Sale of investment and Land

Purchase of Equipment and Patents.

Net Cash = ( Cash Inflows) - (Cash Outflows)

Net Cash = ( 40 million (investment sale) + 16 million ( land sale) ) - ( 26 million (equipment purchase) + 13 million (patent purchase) )

Net Cash = 56,000,000 - 39,000,000

Net Cash = $17,000,000

Net cash flows from investing activities is $17,000,000