Question

Condensed financial data of Ivanhoe Company follows.

Additional information:

1. New plant assets costing $320,000 were purchased for cash during the year.
2. Old plant assets having an original cost of $220,000 and accumulated depreciation of $70,000 were sold for $50,000.

Answer 1

The question concerns the financial data related to Ivanhoe Company's asset transactions and requires analysis of cash flows from investing activities and the impact on the company's financial statements.

Step-by-step explanation:

The student's question pertains to the analysis of financial data involving the purchase and disposal of plant assets by Ivanhoe Company. Understanding the impact of these transactions requires analysis of the company's financial statements, particularly the cash flow statement. When new plant assets are purchased for $320,000 in cash, this outflow is reflected in the investing activities section of the cash flow statement. Conversely, when old plant assets with an original cost of $220,000 and accumulated depreciation of $70,000 are sold for $50,000, there are both cash inflows from the sale and a calculation of gain or loss on the disposal of the asset, which impacts both the cash flows from investing activities and potentially the income statement if there is a gain or loss.