Question

Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?$500,000$50,000$225,000$275,000

Answer 1

Answer:

It will report 225,000

Explanation:

In the cash flow statment we focus on the cash received or used during the year. This is regardless of the gain or loss. When it was adquire the cash flow show use of cash for 75,000. Now, the land is sold. The company receive 225,000 cash. This amount is posted in the cash flow statement, as cash generated for investing activities.

Resuming:

On cash flow, you have to follow the money, not the gain or loss. If there is no cash receipt or disbursement, then you will not post anything.