Reporting Land Transactions on Statement of Cash Flows On th

Reporting Land Transactions on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Debit Credit Debit Credit Date Item Jan. 1 Balance Mar 12Purchased for cash405,000 Oct. 4Sold for $222,000 1,227,000 1,632,000 190,000 1,442,000 Section of Statement of Item Added or Deducted Amount Cash Flows Mar. 12: Purchase of fixed asset Oct. 4: Sale of fixed asset Gain on sale of fixed asset (assume the indirect method)

Solution

Effect of items on cash flow statement is as shown below:

Item	Section of statement of cash flow	Added or deducted	Amount
Mar 12: Purchase of fixed asset	Investing activities	Deducted	405,000
Oct 4: Sale of fixed asset	Investing activities	Added	222,000
Gain on sale of fixed asset (assume the indirect method)	Operating activities	Deducted	32000