erickevin72 Wrote: ------------------------------------------------------- > the possible answer are 1065, 1090, 1135. The > book says is the right answer is 1135 I have no > clue where they got that answer from. Check jerseycitycfa’s first post in the thread and don’t deduct goodwill. That will get you exactly 1135.
My gut feeling: The answer is probably 1135. You have to add back goodwill. Maybe they used the term amortization instead of impairement, but either way, it is non-cash and if deducted as an expense, it must be aded back. I think the key here is a missing piece of info. I would bet that in shortening the question to save time he left out info that he thought wasn’t relevent. My guess is that the car was sold at a gain of 15 that neeeds to be backed out Ni+Dep+GW-Gain+AR-Inv+ap+wp I alsoassume that inv measn inventory and not investments
Oh, and btw, goodwill amortization is not a cash outflow, is a noncash transaction, just like depreciation.
JoeyDVivre Wrote: ------------------------------------------------------- > If you look at the results thread you can almost > hear the sucking noise of all that LI knowledge > being wiped clean. I can honestly 80% of what I read for L1 is out the window Joey!
Net Income $1000: start your calculators Depreciation 70 : noncash transaction, add it back to NI Purchase of equipment 200 : outflow, investing activity Goodwill Amortization 30 : noncash transaction, add it back to NI Sale of motor car 25 : inflow, investing activity Sale of common stock 100: inflow, financing activity Decrease in AR 40 : reduction of current assets, inflow of money, add it Increase in Inv 35: increase in current asset, outflow of money, deduct it issuance of bonds 20 : inflow, financing activity Increase in account payable 30 : increase in current liabilities, add it Increase in wage payable 15 : increase in current liabilities, add it Capital stock Exchanged Equipment 10: exchange of stock for equipment, CF from financing up, cash down, long term assets/equipments up 1000+70+30+40-35+30=1135
Mao1 - Add the 15 wages payable that is on your list but left out of the calc gets the 1150, and then there is probably a gain of 15 on the car which needs to be subtracted. You sell an asset they have yto give you cost basis so you know if there is a gain or loss. You can’t assume proceedss=book value. It’s a glaring omission if not expressly given.
you’re right Super-I. There are 15 missing in action somewhere (perhaps as you said, a gain on the sale)