Session 8: Financial Reporting and Analysis: The Income Statement, Balance Sheet, and Cash Flow Statement
Reading 34: Understanding the Cash Flow Statement
LOS b: Describe how noncash investing and financing activities are reported.
For the year ended December 31, 2007, Gremlin Corporation reported the following transactions:
- Issued 5,000 shares of preferred stock for land with a fair value of $4.8 million.
- Purchased a patent for $3.3 million cash.
- Acquired 40% of the common stock of an affiliate for $2.7 million cash which was borrowed from a bank.
- Exchanged equipment with a book value of $1.7 million for equipment valued at $2.1 million. The exchange was an even trade.
- Converted bonds payable with a book value of $5 million to 50,000 shares of common stock with a fair value of $6 million.
Calculate Gremlin’s cash flow from investing activities and cash flow from financing activities for the year ended December 31, 2007.
|
Cash flow from investing activities |
Cash flow from financing activities |
|
A) |
| $1.7 million inflow |
$1.3 million outflow | | |
|
B) |
| $6.0 million outflow |
$2.7 million inflow | | |
|
C) |
| $2.7 million outflow |
$6.0 million inflow | | |
Only the acquisition of common stock of the affiliate for $2.7 million and the purchase of the patent for $3.3 million are included in cash flow from investing activities. Since the acquisition of the stock purchase was financed with a bank loan, $2.7 million will be reported as a financing inflow. Both remaining transactions are non-cash transactions and are disclosed in the notes to or in a supplementarty schedule to the cash flow statement. | 
发表于 2011-3-16 14:26
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