Question

Land Transactions on the Statement of Cash Flows Veteran Corporation purchased land for $287,000. Later in the year, the company sold a different piece of land with a book value of $121,000 for $108,000. How are the effects of these transactions reported on the statement of cash flows? Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank. Transactions Action Amount Gain or loss on sale of land $ Cash received from sale of land $ Cash paid for purchase of land $

Answer 1

Cash Received from sale of Land:

Cash Received from sale of land i.e. $108000 is Cash inflow from investing Activities and it is shown under Cash flow statement under the head of investing activities with positive Value.

Gain or Loss on Sale of Land:

As per above Transaction there is a loss on sale of Land amount to $13000 which is shown under the head of Cash flow from Operating Activities while making cash flow statement from indirect methods, This is non Cash expense or loss and it is added back under the head of operating Activities.

Cash Paid for purchase of Land:

Cash paid for purchase of land is i.e. $287000 is Outflow of cash and it is shown under cash flow statement with Minus sign under the head of investing Activities.