Exhibit 22-1 Walters Company provided the following information relating to patents for 2010:
$\begin{array}{ll}
\text { Balance, } 1 / 1 / 2010 & \$ 4,800 \
\text { Purchase of } 10 \text {-year life patent for cash } & 2,000 \
\text { Sale of patent at book value } & (1,400)\
\text {Amortization of patents}&(290)\
\text {Balance, 12/31/2010}&\$5,110
\end{array}$

-Refer to Exhibit 22-1.The Cash Flows from Investing Activities section would include a net change related to patents of
A)$(600)
B)$(310)
C)$ 310
D)$ 600

Question

Exhibit 22-1 Walters Company provided the following information relating to patents for 2010:
$\begin{array}{ll}
\text { Balance, } 1 / 1 / 2010 & \$ 4,800 \
\text { Purchase of } 10 \text {-year life patent for cash } & 2,000 \
\text { Sale of patent at book value } & (1,400)\
\text {Amortization of patents}&(290)\
\text {Balance, 12/31/2010}&\$5,110
\end{array}$

-Refer to Exhibit 22-1.The Cash Flows from Investing Activities section would include a net change related to patents of
A)$(600)
B)$(310)
C)$ 310
D)$ 600

Quizplus · Accepted Answer

The net change related to patents in the Cash Flows from Investing Activities section is calculated by considering the cash spent on purchasing new patents and the cash received from selling patents. The purchase of a 10-year life patent for cash was $2,000 (an outflow), and the sale of a patent at book value was $1,400 (an inflow). The net change is therefore $2,000 (outflow) - $1,400 (inflow) = $600 (outflow), which is represented as $(600).

Exhibit 22-1 Walters Company Provided the Following Information Relating to Patents