Investing activities include receiving cash from the sale of land and also the resulting gain or loss on the sale.

Question

Quizplus · Accepted Answer

Whenever a company sells land,it records three things: (1)a decrease in the Land account,(2)an increase in the Cash account for the cash received on disposal,and (3)a gain if the cash received is more than the book value of the assets sold (or a loss if the cash received is less than the book value of the assets sold).The only part of this transaction that qualifies for the statement of cash flows is the cash received on disposal.This cash inflow is classified as an investing activity,just like the original land purchase.

Investing Activities Include Receiving Cash from the Sale of Land