For each of the following transactions, determine what adjustment is necessary to prepare the statement of cash flows using the indirect method.

a. Firm A sells equipment with a cost of $1,000 and accumulated depreciation of $800 for $400 cash.
b. Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,000 as equity in earnings of affiliate. No dividends are paid by B.
c. Firm A acquires a building through a capital lease transaction. The building and lease were recorded at $100,000. Firm A chooses to report this transaction in the statement of cash flows.

Question

For each of the following transactions, determine what adjustment is necessary to prepare the statement of cash flows using the indirect method.

a.	Firm A sells equipment with a cost of $1,000 and accumulated depreciation of $800 for $400 cash.
b.	Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,000 as equity in earnings of affiliate. No dividends are paid by B.
c.	Firm A acquires a building through a capital lease transaction. The building and lease were recorded at $100,000. 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 adjustment is necessary to prepare the statement of cash flows using the indirect method.

a.	Firm A sells equipment with a cost of $1,000 and accumulated depreciation of $800 for $400 cash.
b.	Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,000 as equity in earnings of affiliate. No dividends are paid by B.
c.	Firm A acquires a building through a capital lease transaction. The building and lease were recorded at $100,000. Firm A chooses to report this transaction in the statement of cash flows.

For Each of the Following Transactions, Determine What Adjustment Is