For each of the following transactions, determine what adjustments are necessary to prepare the statement of cash flows using the indirect method.
a. Firm A sells equipment with a cost of $2,000 and accumulated depreciation of $1,000 for $600 cash.
b. Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,500 as equity in earnings of affiliate. A also received $1,600 in dividends from B in the current year.
c. Firm A converts $50,000 of debt to common stock. Firm A chooses to report this transaction in the statement of cash flows.

Question

For each of the following transactions, determine what adjustments are necessary to prepare the statement of cash flows using the indirect method.
a.	Firm A sells equipment with a cost of $2,000 and accumulated depreciation of $1,000 for $600 cash.
b.	Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,500 as equity in earnings of affiliate. A also received $1,600 in dividends from B in the current year.
c.	Firm A converts $50,000 of debt to common stock. Firm A chooses to report this transaction in the statement of cash flows.

Quizplus · Accepted Answer

The Answer of For each of the following transactions, determine what adjustments are necessary to prepare the statement of cash flows using the indirect method.
a.	Firm A sells equipment with a cost of $2,000 and accumulated depreciation of $1,000 for $600 cash.
b.	Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,500 as equity in earnings of affiliate. A also received $1,600 in dividends from B in the current year.
c.	Firm A converts $50,000 of debt to common stock. Firm A chooses to report this transaction in the statement of cash flows.

For Each of the Following Transactions, Determine What Adjustments Are