During the current year,Atkins,Inc.sold a parcel of land for $840,000 cash.The land had been purchased by Atkins several years ago for $410,000.Atkins,Inc.uses the indirect method to prepare its statement of cash flows.In order to reconcile net income to net cash flow from operating activities,net income must be:

Question

Quizplus · Accepted Answer

The sale of the land is an investing activity, and therefore the proceeds from the sale should be reported in the investing section of the cash flow statement. However, the gain on the sale of the land ($840,000 - $410,000 = $430,000) will affect net income, and therefore must be adjusted for in the operating section of the cash flow statement. The adjustment needed is to decrease net income by $430,000.

During the Current Year,Atkins,Inc