Loss on sale of equipment $ 4,000 Purchase of Apon Corp. bonds (face value $400,000) 375,000 Proceeds...

Loss on sale of equipment $ 4,000
Purchase of Apon Corp. bonds (face value $400,000)  375,000
Proceeds from sale of machinery  200,000
Dividends paid  25,000
Proceeds from sale of treasury stock  100,000

how to calculate the net cash flow of investing activities?

Solutions

Expert Solution

Transactions relating to assets only are investing activities.

NCF (investing activities) = Sale of machinery – Purchase of bonds

= 200,000 – 375,000

= - 175,000

Notes:

#1) NCF is negative, since cash outflow (by way of purchase of bonds) is higher.

#2) Loss on sale of equipment is an operating activity, but not investing activity.

#3) Face value of bond (400,000) is not considered, since the purchase is not made by this amount.

#4) Dividend paid is a financing activity, but not investing activity.

#5) Treasury stock is a financing item, but not investing item.

jeff jeffy answered 1 year ago

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