13.3 Investing Activities

Question 1

investing activities realte tooooo

Answer 1

non current asset accounts

Question 2

Although investing activities normally relate to changes in non-current asset accounts, some current asset account transactions may also relate to investing activities. For example, when a company lends funds on a short-term basis to generate interest, the increase in short-term notes receivable is an investing activity, not an operating activity. This exception is noted to advocate caution about applying general guidelines too broadly.

Question 3

You need to know four things about a non-current asset account when preparing the statement of cash flows:

if you know 3/4 solve for the 4th

Answer 3

The beginning balance

The ending balance

The increase (asset purchases) in the account during the period

The decrease (cost of items disposed of) in the account during the period

Question 4

for disposals of property, plant, and equipment, the only item a company will report as an investing activity is the receipt of the sale proceeds. It will also deduct the gain (or add back the loss) on disposal from net income in the operating activities section.

Question 5

Although Computer Services has no investment accounts, it is important to remove any noncash transactions when analyzing changes in any long-term investment and investment-related income accounts such as gains or losses on the sale of these investments, or income from associates (which is not a cash flow). Similar to the disposal of equipment discussed above, items reported for investments not held for trading in a statement of cash flows should consist only of amounts paid when purchasing the investments and amounts received when selling investments. These amounts are not netted together but are shown separately.