the loss isn’t a cash flow; it’s the difference between proceeds if sale and the
carrying amount of the asset. If the loss isn’t removed from net income when
determining cash from operations, a $54,000 understatement will result.
c.Drilling rights are capital assets and therefore would be considered an
investing cash flow. The cash payment represents an outflow of $250,000.
d. Maintenance performed on drilling equipment is an operating cash flow as
it’s a normal expense that occurs in the course of operations. The item
represents a cash outflow of $12,000.
e.There would be no effect on cash flows as no cash has changed hands.
When the government is paid the outlay would be considered an operating
f. Under GAAP for Private Enterprises dividends are a financing cash flow
as they are payments made to individuals who invested in the company.
Under IFRS managers can choose to classify dividend payments as
operating or financing activities. The payment represents an outflow of
g. Interest paid is considered an operating cash flow under GAAP for Private
Enterprises. Under IFRS managers can choose to classify interest
payments as operating or financing activities. Regardless of the method
used, the item represents a cash outflow of $20,000.
Accounts receivable on January 1, 2015 595,000
Accounts receivable on December 31, 2015 520,000 (75,000)
Inventory on January 1, 2015 975,000
Inventory on December 31, 2015 910,000 (65,000)
Accounts payable on January 1, 2015 640,000
Accounts payable on December 31, 2015 595,000 (45,000)
Depreciation expense310,000 310,000
Cash From Operations - Indirect Method
For the Year Ended 2015
Cash From Operations:
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