In Lynne Company there was an increase in the land account during the year of $43000. Analysis reveals that the change resulted from a cash sale of land at cost $115000 and a cash purchase of land for $158000. In the statement of cash flows the change in the land account should be reported in the investment section:
A) as a net purchase of land $43000.
B) only as a purchase of land $158000.
C) as a purchase of land $158000 and a sale of land $115000.
D) only as a sale of land $115000.

Question

Quizplus · Accepted Answer

The change in the land account resulted from both a purchase of land for $158,000 and a sale of land for $115,000. Therefore, it should be reported in the investment section as a purchase of land for $158,000 and a sale of land for $115,000, resulting in a net increase of $43,000.

In Lynne Company There Was an Increase in the Land