Question

Terps Corp.'s transactions for the year ended December 31, 2021 included the following: Acquired 50% of Gant Corp.'s common stock for $300,000 cash which was borrowed from a bank. Issued 5,000 shares of its preferred stock for land having a fair value of $480,000. Issued 600 of its 11% debenture bonds, due 2026, for $588,000 cash. Purchased a patent for $330,000 cash. Paid $180,000 toward a bank loan. Sold investment securities for $1,194,000. Had a net increase in returnable customer deposits (long-term) of $132,000. Terps Company's net cash provided by investing activities for 2021 was

Answer 1

Answer: $564,000

Explanation:

Investing Activities cash flow involves the cash transactions that have to do with fixed assets and the securities of other companies. Purchase of fixed assets and the securities reduces the investing cashflow and sales increases it.

= -300,000 + (-330,000) + 1,194,000

= $564,000

Patents are a type of fixed assets so will be accounted for in the Investing activities if it was purchased with cash.