Question

Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

a. $173,000
b. $140,000
c. $313,000
d. $33,000

Answer 1

The correct amount to report as an investing activity from the sale of land is the cash received, which is $173,000, reflecting the full amount of proceeds from the sale. The correct answer is a. $173,000.

Step-by-step explanation:

The amount that should be reported as an investing activity from the sale of land on the statement of cash flows is the cash received from the sale. When land costing $140,000 was sold for $173,000, the entire cash received from the transaction, which is $173,000, should be reported as cash inflow from investing activities. The gain of $33,000, which is the difference between the sale price and the cost of the land, is reported in the income statement but does not affect the cash flow from the sale of the asset.