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Equipment with a book value of $65,300 and an original cost of $133,000 was sold at a loss of $14,000.Paid $89,000 cash for a new truck.Sold land costing $154,000 for $198,000 cash, yielding a gain of $44,000.Long-term investments in stock were sold for $60,800 cash, yielding a gain of $4,150. Use the above information to determine this company’s cash flows from investing activities. (Amounts to be deducted should be indicated with a minus sign.)

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Answer:

The company’s cash flows from investing activities is $221,100

Explanation:

Investing Activity : The investing activity deals with purchase and sale of long term assets. The sale of long term assets is added in the cash flow whereas purchase of fixed assets is deducted from the cash flow.

The computation of cash flow from investing activity is shown below:

Add : Sale of equipment ( Book value - loss ) = ( $65,300 - $14,000) = $51,300

Less : Purchase of new truck = -$89,000

Add : Sale of land = $198,000

Add : Sale of long term investment = $60,800

So, the cash flow from investment activity is equals to

= $51,300 - $89,000 + $198,000 + $60,800

= $221,100

Hence, the company’s cash flows from investing activities is $221,100

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