Suzanne Inc.'s policy is to report all cash flows arising from interest and dividends in the operating activities section. The activities for the year ended December 31, 2021 included the following:
• Interest revenue for the period was $12,000. The interest receivable account decreased $3,000.
• Sold an Investment at FVOCI for $10,000. The original cost was $5,000.
Using the indirect method, how much would be presented as cash flow from operating activities?
A)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 12,000.
B)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 15,000.
C)Gain on sale in the amount 5,000 + Interest received in the amount of 12,000.
D)Adjustment to Net Income of -5,000 for the recycled gain on sale of the investment at FVOCI + Interest cash flow of +15,000.

Question

Suzanne Inc.'s policy is to report all cash flows arising from interest and dividends in the operating activities section. The activities for the year ended December 31, 2021 included the following: 
• Interest revenue for the period was $12,000. The interest receivable account decreased $3,000.
• Sold an Investment at FVOCI for $10,000. The original cost was $5,000.
Using the indirect method, how much would be presented as cash flow from operating activities?
A)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 12,000.
B)Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 15,000.
C)Gain on sale in the amount 5,000 + Interest received in the amount of 12,000.
D)Adjustment to Net Income of -5,000 for the recycled gain on sale of the investment at FVOCI + Interest cash flow of +15,000.

Quizplus · Accepted Answer

The gain on sale of the investment is adjusted out of net income, and the cash flow from interest is adjusted for the decrease in interest receivable, resulting in $15,000 cash flow from interest.