Cash Flows from Investing Activities PDF

Cash Flows from Investing Activities Investing activities affect long-term assets, such as Plant Assets, Investments, and Notes Receivable. These are shown on ShopMart’s balance sheet (Exhibit F:14-3). Now, let’s see how to compute the investing cash flows. When computing investing cash flows, i...

Cash Flows from Investing Activities Investing activities affect long-term assets, such as Plant Assets, Investments, and Notes Receivable. These are shown on ShopMart’s balance sheet (Exhibit F:14-3). Now, let’s see how to compute the investing cash flows. When computing investing cash flows, it is helpful to evaluate the T-accounts for each long-term asset. The T-account will show if there was an acquisition or disposal that The beginning and ending balances for each account are taken directly from the comparative balance sheet. Depreciation expense has been included in the Accumulated Depreciation account, and this was taken from the income statement. The acquisition and disposal information came from the additional information provided when we introduced the example: Purchased $310,000 in plant assets by paying cash. Sold plant assets with a cost of $55,000 and accumulated depreciation of $15,000, yielding a gain of $10,000. We now know that ShopMart paid $310,000 cash to purchase plant assets. This item is listed first in the investing activities section and shown as an outflow of cash, as indicated by the parentheses. Next we need to determine the amount of cash received for the disposal of plant assets. Using the information provided, we can recreate the journal entry for the disposal and solve for the missing cash amount The cash receipt from the sale of plant assets of $50,000 is shown next in the invest-ing activities section. As there are no other changes to long-term assets, the net cash from investing activities is determined. Notice that this is a net cash outflow, as indicated by the parentheses, and is reported as Net Cash Used for Investing Activities. In this partial statement, we are showing only the investing activities section of the statement of cash flows. Remember that the investing activities section is reported after the operating activities section