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The Blandings Home Construction Company purchased a new crane for $350,000 this year. It sold the...

The Blandings Home Construction Company purchased a new crane for $350,000 this year. It sold the old crane for $50,000. At the time it had a net book value of $20,000. Assume any profit on the sale of old equipment is taxed at 21%. These were the only transactions that affected investing activities this year. Construct the Cash Flow from Investing Activities section of the statement of cash flows to concisely convey the maximum information to readers of the company's financial statements. Use a minus sign, to indicate any decreases in cash or cash outflows.

Cash From Investing Activities
Investment in new equipment $  
Sale of surplus equipment after tax    
Net new investment

Solutions

Expert Solution

Statement of Cash flows
Cash flow from Investing Activities Amount(in $) Amount(in $)
Purchase of new crane -350000
Sale of old crane after tax 43700
Net Cash outflow from Investing Activities -3,06,300

Working for Cash inflow after tax from Sale of old crane

Sale price = 50000, Book vale = 20000

Profit = 50000-20000 = 30000

Tax on Profit = 30000*0.21 = 6300

Net Cash flow on Sale = 50000 - 6300 = $43700

jeff jeffy answered 2 years ago
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