Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?

Question

Quizplus · Accepted Answer

The amount reported in the statement of cash flows for investing activities reflects the cash inflow or outflow from the sale or purchase of an asset. In this case, Firefly Inc. received $225,000 cash from the sale of the land, which is the amount that should be reported as an investing activity. The loss of $50,000 ($275,000 purchase price - $225,000 sale price) is relevant for the income statement but does not affect the cash flow statement's reporting of the transaction.