In Shannon Company, there was an increase in the land account during the year of $48,000. Analysis reveals that the change resulted form a cash sale of land at cost $110,000, and a cash purchase of land for $158,000. 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, $48,000.
B) only as a purchase of land $158,000.
C) as a purchase of land $158,000 and a sale of land $110,000.
D) only as a sale of land $110,000.

Question

Quizplus · Accepted Answer

The change in the land account resulted from both a cash sale of land and a cash purchase of land, therefore it should be reported in the investment section as a purchase of land for $158,000 and a sale of land for $110,000, resulting in a net increase of $48,000.

In Shannon Company, There Was an Increase in the Land