Hoboken's activities for the year ended December 31, 2021 included the following: • Sold an investment at FVPL for $12,000. The investment was held for trading purposes. The book value was $10,000.
• Sold an Investment at FVOCI for $8,000. The original cost of the investment was $9,000.
Using the direct method, how much would be presented as cash flow from operations for the investment at FVPL investment?
A)Proceeds from sale of am investment at FVPL in the amount of 12,000.
B)Disposal of an investment at FVPL investment in the amount 10,000.
C)Gain on sale of an investment at FVPL investment in the amount 2,000.
D)Loss on sale of an investment at FVPL investment in the amount 2,000.

Question

Quizplus · Accepted Answer

The direct method of reporting cash flows presents the specific cash flows associated with items that affect cash flow. The sale of an investment at FVPL (Fair Value Through Profit or Loss) for $12,000 represents actual cash inflow from investing activities, hence it is the correct amount to be presented as cash flow from operations for the investment at FVPL.

Hoboken's Activities for the Year Ended December 31, 2021 Included