Question

1. Land Transactions on the Statement of Cash Flows

   Alpha Corporation purchased land for $436,000. Later in the year, the company sold a different piece of land with a book value of $275,000 for $300,000.

   How are the effects of these transactions reported on the statement of cash flows assuming the indirect method is used? Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank.

   Transactions	Action	Amount
   Gain or loss on sale of land	Added to net income	$
   Cash received from sale of land	Part of cash flows from investing activities	$
   Cash paid for purchase of land	Part of cash flows from investing activities	$

   Feedback

   Property, plant and equipment are considered noncurrent assets. Recall the definitions of each section of the statement of cash flows. What type of an affect would a gain or loss have on the statement of cash flows?

   Learning Objective 3.

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Answer 1

	Alpha Corporation
	Purchase of Land=(A)	$                                                                         4,36,000.00
	Sale of Land=(B)	$                                                                         3,00,000.00
	Book Value=(C )	$                                                                         2,75,000.00
	Gain on Sale of Land=(B)-(C )	$                                                                             25,000.00
	Transaction	Action	Amount
	Gain on Sale of Land	Added to Net Income	$     25,000.00
	Cash received from sale of Land	Part of cash Flow from Investing Activities	$ 3,00,000.00
	Cash received from sale of Land	Part of cash Flow from Investing Activities	$ 4,36,000.00
	Cash Flow Statement:
1)	It reports cash receipts,cash payment and change in cash.
2)	The receipts and Payments of cash are reported under three sections:a) Operating Section,Investing Section and Financing Section
3)	Gain on sale of Property,Plant and Equipment is a part of net income and Operating section of Cash flow
	Cash Flow from Operating Activities
	Net Income		XX
	Add: Loss on sale of Fixed Assets
	Less: Gain on Sale of Fixed Assets
4)	All Purchases and sales of Property,Plant and Equipment (including Land) is a part of Cash Flow from Investing Activities
	Cash Flow From Investing Activities
	Sale of Fixes Assets	(+)
	Purchase of Fixed Assets	(-)
5)	Operating Activities reports all those cash transactions that created revenue and expenses in net income statement.
	Investing Activities reports Purchase and sales of Investment and Property plant and Equipment.
	Financing Activities like Increase in common stock,Payment of Dividend ,Repayment of loan etc reported under cash flow from financing activities.