[Iggy1985]

Never particularly enjoyed the statement of cash flows, I remember doing my audit project for class and thinking ‘the statement of cash flows is like a bad hair day, the more you mess with it the worse it gets’ >_>

Anyway… Wiley is confusing the heck out of me..

according to the MCQs, a gain on sale of PPE is an operating activity under the indirect method, but an investing activity under the direct method. Can anyone break this down a little for me? Thanks in advance <3

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[CPA50]

Hi Iggy – Hope this helps…

I am still struggling with everything! 19th is right around the corner and I'm still scoring 20% – ARGH! Going to pound out some hours of MCQ today.

Good luck to you 🙂

https://www.accountingcoach.com/cash-flow-statement/explanation/8

One of the rules in preparing a statement of cash flows is that the entire proceeds received from the sale of a long-term asset must be reported in the second section of the statement, the investing activities section. This presents a problem because any gain or loss on the sale of an asset is also included in the company's net income which is reported in the first section—operating activities. To avoid double counting, each gain is deducted from net income and each loss is added to net income in the operating activities section of the cash flow statement.

AUD - 80
BEC - 77
FAR - 80
REG - 80

3 years

+ 16 tests

+ 2 expired sections

= DONE FOREVER!

AUD 88 (expired), 80 retake
FAR 64,69,67,73,67,73,73,73, August 3
REG 75 (expired) September 7
BEC 72, 77

The adventure continues...

[Iggy1985]

Thanks for the resource CPA50! I was having trouble finding a good one. We test on the same day, it's getting so close! Good luck to you as well 🙂

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Iggy1985]

here's another one messing me up!

Kollar Corp.’s transactions for the year ended December 31, year 2, included the following:

Purchased real estate for $550,000 cash which was borrowed from a bank.

Sold available-for-sale investment securities for $500,000.

Paid dividends of $600,000.

Issued 500 shares of common stock for $250,000.

Purchased machinery and equipment for $125,000 cash.

Paid $450,000 toward a bank loan.

Reduced accounts receivable by $100,000.

Increased accounts payable by $200,000.

Kollar’s net cash used in investing activities for year 2 was

$175,000

This answer is correct. Investing activities include cash flows involving assets other than operating items. The investing activities are

Purchased real estate $(550,000)

Sold available-for-sale investment securities 500,000

Purchased mach. and equip. (125,000)

Net cash used in investing activities $(175,000)

The bank borrowing ($550,000), dividend payment ($600,000), issuance of stock ($250,000), and bank loan payment ($450,000) are financing activities. The reduction of accounts receivable ($100,000) and the increase in accounts payable ($200,000) are operating items.

If they're saying the bank borrowing is financing, why are they including it in investing also? Argh! Is it both an inflow in financing and an outflow in investing?

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[CPA50]

I think it's because it's TWO different transactions. Purchasing the real estate is the investment. Borrowing the funds for the purchase is the financing. Does that make sense?

AUD - 80
BEC - 77
FAR - 80
REG - 80

3 years

+ 16 tests

+ 2 expired sections

= DONE FOREVER!

AUD 88 (expired), 80 retake
FAR 64,69,67,73,67,73,73,73, August 3
REG 75 (expired) September 7
BEC 72, 77

The adventure continues...

[Iggy1985]

yeah definitely, I was thinking significant non cash, I'm starting to get the hang of it again, just practice practice practice I guess :O

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[M.O.D.]

Think of discrete cash flows:

One is incoming cash (the financing via a bank loan)

The other is outgoing cash: for investment in real estate, but it could be toward working capital ie, inventory, then this cash flow would be for operations, not investment.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Author]

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