Question

Land costing $77,900 was sold for $99,800 cash. The gain on the sale was reported on the income statement as other revenue. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Answer 1

Answer:

$99,800

Explanation:

The statements of cash flows show cash inflows and out flows from the business activities which are recognized as operating, investing and financing activities.

When an asset is sold, the amount received from the sale of the asset is recognized as an inflow in the investing section of the cash flow statement.

The gain/loss from the sale would have been treated in the operating section based on the effect it had in the income statement while computing the net income of the company.