Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 21, Problem 21.14Q
To determine
Operating activities: Operating activities refer to the normal activities of a company to carry out the business. The examples for operating activities are purchase of inventory, payment of salary, sales, and others.
Investing activities: Investing activities refer to the activities carried out by a company for acquisition of long term assets. The examples for investing activities are purchase of equipment, long term investment, sale of land, and others.
To Explain: The reason for not reporting the gain from sale of an asset as cash flow from the operating activities in the statement of
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Depreciation is incorporated in cash flows because it:
A.
Is unavoidable cost
B.
Is a cash flow
C.
Involves an outflow
D.
Reduces tax liability
As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is:
higher.
lower.
the same.
Net capital gain means the excess of the gains from sales of exchanges ofordinary assets over losses from such sales or exchanges.
TRUE OR FALSE?
Chapter 21 Solutions
Intermediate Accounting, 10 Ed
Ch. 21 - Effects of all cash flows affect the balances of...Ch. 21 - Prob. 21.2QCh. 21 - Prob. 21.3QCh. 21 - Prob. 21.4QCh. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - The sale of stock and the sale of bonds are...Ch. 21 - Does the statement of cash flows report only...Ch. 21 - Prob. 21.10Q
Ch. 21 - Perhaps the most noteworthy item reported on an...Ch. 21 - Prob. 21.12QCh. 21 - Given sales revenue of 200,000, how can it be...Ch. 21 - Prob. 21.14QCh. 21 - When determining the amount of cash paid for...Ch. 21 - Prob. 21.16QCh. 21 - When using the indirect method of determining net...Ch. 21 - Prob. 21.18QCh. 21 - Prob. 21.19QCh. 21 - Where can we find authoritative guidance for the...Ch. 21 - U.S. GAAP designates cash outflows for interest...Ch. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Investing activities LO215 Carter Containers sold...Ch. 21 - Financing activities LO216 Refer to the situation...Ch. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Classification of cash flows LO213 through LO216...Ch. 21 - Indirect method; reconciliation of net income to...Ch. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Prob. 21.31ECh. 21 - Prob. 21.32ECh. 21 - Prob. 21.1PCh. 21 - Research Case 219 FASB codification; locate and...Ch. 21 - IFRS Case 2110 Statement of cash flows...
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Similar questions
- If a company reports a gain/(loss) from the sale of assets, as part of the net income on the income statement, and the net book value of those assets on the date of the sale is known, can the amount of the cash proceeds from the sale be determined? If so, how?arrow_forwardDoes the value of any asset depends on the cash flows producedby the asset? Why?arrow_forwardProvide a brief explanation of why depreciation of capital assets is considered in determining potential net income from an investment, but not included in determining the net cash flow of an investment.arrow_forward
- As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is:arrow_forwarddepreciation does not involve the movement of cash,therefore uncessary in accountiong for an entity's performancearrow_forwardDepreciation does not involve movement of cash, therefore unnecessary in accounting for an entity’s performance, Discuss?arrow_forward
- how can depreciation be a cash flow?arrow_forwardIn current purchasing power technique (a) Why is it necessary to consider monetary assetsseparately from nonmonetary assets? Analyze withexamples. (b) Why does holding monetary assets lead to apurchasing power loss, but holding nonmonetary assetsdoes not lead to a purchasing power loss? Analyze withexamplesarrow_forwardWhat is the first impact on asset turnover of promptly expensing a cash outlay compared to capitalizing it? The asset turnover rate is defined as follows:arrow_forward
- If an asset is sold at a gain, why is the gain deducted from net income when computing the netcash provided by operating activities under the indirect method?arrow_forwardNet capital gain means the excess of the gains from sales of exchanges ofordinary assets over losses from such sales or exchanges. a.true b.falsearrow_forwardWhat is the relationship of the asset turnover to the return on assets?arrow_forward
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