indirect method

CFA Level I
#1

Land costing $50,000 was sold by Jimmy Corporation at a gain of $10,000. Assuming that Jimmy uses the indirect method for presenting operating cash flow, how will the sale of land be reflected on its statement of cash flow? Cash flow from investing activities will increase by: A) $50,000; cash flow from operating activities will require a negative adjustment to net income of $10,000. B) $60,000; cash flow from operating activities will require a positive adjustment to net income of $10,000. C) $60,000; cash flow from operating activities will require a negative adjustment to net income of $10,000. D) $50,000; cash flow from operating activities will require a positive adjustment to net income of $10,000.

#2

D?

#3

C

#4

C CFI inflow of 60,000, a gain of 10,000 is deducted from the CFO

#5

map1 Wrote: ------------------------------------------------------- > C > > CFI inflow of 60,000, a gain of 10,000 is deducted > from the CFO Map which exam in stalla practice book have you done?

#6

I believe you back out gains on sales of assets. The $60k flows to CFI and the $10k gain needs to be back out… C)

#7

answer is c, here is the explanation The sale of land has generated cash of $60,000 ($50,000 cost plus $10,000 gain), and all of this will need to be disclosed as cash flow from investing activity. Since the $10,000 gain is included in net income, net income will need to be adjusted downward to reflect the correct cash flow from operating activities and to avoid double counting.

#8

i would say C as well

#9

strangedays Wrote: ------------------------------------------------------- > > > Map which exam in stalla practice book have you > done? None yet, I started 1 AM but I got bored. I usually finish a passmaster exam in about one hour, 20 minutes TOP. At about 85% correct. Why?

#10

map1 Wrote: ------------------------------------------------------- > strangedays Wrote: > -------------------------------------------------- > ----- > > > > > Map which exam in stalla practice book have you > > done? > > None yet, I started 1 AM but I got bored. I > usually finish a passmaster exam in about one > hour, 20 minutes TOP. At about 85% correct. Why? …I was just thinking…if someone knows how to do all the questions in the stall exercise book…then do you think it is a good preparation for the exam?

#11

I think so! hope so!