The opening balance in the land account for Adara Corp for fiscal 2017 was $500,000; the closing balance was $610,000.During the year land costing $130,000 was given to a creditor in full settlement of a $152,000 loan.The fair value of the land at the time of the exchange was $152,000.The company also purchased a separate parcel of land for cash during the year.
Required:
a.Prepare the underlying journal entries to record the foregoing transactions and record events stemming from the transactions (e.g.,the gain or loss on exchange of land for loan,etc.).
b.For each entry identify the cash flow effects,if any,under both the direct and indirect methods of presentation and classify the cash flow according to its nature.
c.Why does the IASB require that companies classify cash flows as arising from operations,investing,or financing activities?

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The Answer of The opening balance in the land account for Adara Corp for fiscal 2017 was $500,000; the closing balance was $610,000.During the year land costing $130,000 was given to a creditor in full settlement of a $152,000 loan.The fair value of the land at the time of the exchange was $152,000.The company also purchased a separate parcel of land for cash during the year.
Required:
a.Prepare the underlying journal entries to record the foregoing transactions and record events stemming from the transactions (e.g.,the gain or loss on exchange of land for loan,etc.).
b.For each entry identify the cash flow effects,if any,under both the direct and indirect methods of presentation and classify the cash flow according to its nature.
c.Why does the IASB require that companies classify cash flows as arising from operations,investing,or financing activities?

The Opening Balance in the Land Account for Adara Corp