Question

The Resort sold investments that originally cost it 300,000 for200,000. How would this transaction affect the Investing Activities section of its statement of cash flows?

1) as a $200,000 noncash transaction
2) as a $200,000 cash outflow
3) as a $200,000 cash inflow
4) no effect on the Investing Activities section

Answer 1

The sale of investments at a loss by the Resort would not have a direct impact on the Investing Activities section of its statement of cash flows.

Step-by-step explanation:

The sale of investments by the Resort would not have a direct impact on the Investing Activities section of its statement of cash flows.

This is because the Investing Activities section only includes cash flows related to the acquisition and disposal of long-term assets such as property, plant, and equipment, and investments in other entities.

In this case, the Resort is selling existing investments at a loss, which is a noncash transaction and does not result in a cash inflow or outflow. Therefore, the correct answer to the question would be 4) no effect on the Investing Activities section.