Question

Kutcher systems sold land, investments, and issued their own common stock for $10 million, $15 million, and $20 million, respectively. kutcher also purchased treasury stock, equipment, and a patent for $2 million, $4 million, and $6 million, respectively.

1. what amount should the company report as net cash flows from investing activities?

Answer 1

Kutcher systems should report $13 million as net cash flows from investing activities, which is calculated by subtracting the total cash outflows from the cash inflows relating to investment transactions.

Step-by-step explanation:

Net cash flows from investing activities for Kutcher systems should be calculated by subtracting the cash outflows associated with purchasing assets from the cash inflows from selling assets. The company sold land and investments, and these are cash inflows of $10 million and $15 million respectively. On the other hand, it purchased treasury stock, equipment, and a patent, resulting in cash outflows of $2 million, $4 million, and $6 million respectively.

To calculate the net cash flow from investing activities, we sum the cash inflows and then subtract the total of the cash outflows. So, the calculation would look like this: ($10 million + $15 million) - ($2 million + $4 million + $6 million) = $25 million - $12 million, which equals $13 million. Therefore, Kutcher systems should report $13 million as net cash flows from investing activities.