Question

In: Accounting

Using an indirect method statement of cash flows of Apple Inc., discuss an item that was...

Using an indirect method statement of cash flows of Apple Inc., discuss an item that was recorded when calculating net income, but is adjusted as an increase or decrease to determine cash provided by (used by) operating activities, specifically an asset, liability, gain, or loss. Include a summary of how that item impacted net income (or net loss) and why there is an adjustment necessary to determine cash from operations. Use an item not already used in a classmate's post, if possible. In your post, include a screenshot of the statement of cash flows you are analyzing.

Solutions

Expert Solution

Net income is adjusted by adding non cash expense items included in Income Statement.

The losses and gains on sale of fixed asset/investment is also adjusted.

Also, Changes in current asset and current liabilities are also adjusted.

No. Conceptual Notes
1 Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2 Effects of Non - Cash Transaction are adjusted from Net Income.
3 Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4 Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5 Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income

One item 'as asked' in the requirement considered here is "LOSS ON SALE OF EQUIPMENT" :

- Loss on sale of equipment is ADDED back to net income under Operating activities.

Reason :

This is because such LOSS has effect of decreasing the net income calculated in income statement.

- Moreover, loss/gain on sale is an item of investing activities, hence its effects should be neutralized from operating activities.

Thats why it is added back.

Feel free to ask any clarification through comment section. And also you can give feedback / rating the answer by doing like.

Thank You


Related Solutions

Using an indirect method statement of cash flows from a publicly-traded company, discuss an item that...
Using an indirect method statement of cash flows from a publicly-traded company, discuss an item that was recorded when calculating net income, but is adjusted as an increase or decrease to determine cash provided by (used by) operating activities, specifically an asset, liability, gain, or loss. Include a summary of how that item impacted net income (or net loss) and why there is an adjustment necessary to determine cash from operations. Use an item not already used in a classmate's...
Using an indirect method statement of cash flows from a publicly traded company, discuss an item...
Using an indirect method statement of cash flows from a publicly traded company, discuss an item that was recorded when calculating net income, but is adjusted as an increase or decrease to determine cash provided by (used by) operating activities, specifically an asset, liability, gain, or loss. Include a summary of how that item impacted net income (or net loss) and why there is an adjustment necessary to determine cash from operations.
Using an indirect method statement of cash flows from a publicly traded company, discuss an item...
Using an indirect method statement of cash flows from a publicly traded company, discuss an item that was recorded when calculating net income, but is adjusted as an increase or decrease to determine cash provided by (used by) operating activities, specifically an asset, liability, gain, or loss. Include a summary of how that item impacted net income (or net loss) and why there is an adjustment necessary to determine cash from operations.
Statement of Cash Flows—Indirect Method The following statement of cash flows for Shasta Inc. was not...
Statement of Cash Flows—Indirect Method The following statement of cash flows for Shasta Inc. was not correctly prepared. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year. Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities: Net income $360,000 Adjustments to reconcile net income to net cash flow from operating activities:    Depreciation 100,800    Gain...
Prepare statement of cash flows using the indirect method. The income statement for 2017 and the...
Prepare statement of cash flows using the indirect method. The income statement for 2017 and the balance sheets for 2017 and 2016 are presented for GibsonGibson ​Industries, Inc. LOADING... ​(Click the icon to view the income​ statement.)                                             LOADING... ​(Click the icon to view the balance​ sheets.) LOADING... ​(Click the icon to view additional​ information.) Requirement Prepare a statement of cash flows for GibsonGibson ​Industries, Inc., for the year ended December​ 31,2017​, using the indirect method. Prepare the statement one section...
Prepare statement of cash flows using the indirect method. The income statement for 2017 and the...
Prepare statement of cash flows using the indirect method. The income statement for 2017 and the balance sheets for 2017 and 2016 are presented for Gibson​ Industries, Inc. ​ ​ LOADING... ​(Click the icon to view additional​ information.) Requirement Prepare a statement of cash flows for Gibson Industries, Inc., for the year ended December​ 31,2017​, using the indirect method. Prepare the statement one section at a time. ​(Use parentheses or a minus sign for numbers to be subtracted and for...
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating...
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign...
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating...
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required. In the investing and financing activities section, use a minus sign...
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating...
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows:      Dec. 31, 20Y2      Dec. 31, 20Y1 Assets Cash $ 701,950 $ 755,530 Accounts receivable (net) 638,770 582,620 Inventories 968,690 891,480 Prepaid expenses 22,460 26,670 Land 241,470 365,010 Buildings 1,116,100...
If a company is using the indirect method to prepare the statement of cash flows, identify...
If a company is using the indirect method to prepare the statement of cash flows, identify where an increase in the accounts receivable account should be reported: Multiple Choice An increase in cash flows from financing activities A decrease in cash flows from investing activities An increase in cash flows from investing activities An increase in cash flows from operating activities A decrease in cash flows from operating activities
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT