Question

On July 15, 2021, M.W. Morgan Distribution sold land for $32.0 million that it had purchased...

On July 15, 2021, M.W. Morgan Distribution sold land for $32.0 million that it had purchased in 2016 for $27.0 million.

Required:
What would be the amount(s) related to the sale that Morgan would report in its statement of cash flows for the year ended December 31, 2021, using the direct method? The indirect method?

Direct Method

($ in millions)
  

Indirect Method

($ in millions)
  
Business   Accounting   
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Homework Answers

Answer #1

Under direct method it comes directly in cash flow from invetsment activities : $32 million

Under indirect method :

reduce from net profit $5m to find correct cash from operating activities (as profit of $5m is included in net profit)

include in cash from investment activity : $32 million

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