cash payments to acquire equity investments are quizlet

Plus the gain and less the amount of tax attributable to the gain. Cash received from customers Cash comprises cash on hand (e.g. The accounting for an investment in an equity security is determined by the amount of control of and influence over operating decisions the company purchasing the stock has over the company issuing the stock. iv. Depreciation expense 34,000 $550, Dunbarn Co. had the following activities during the year: \hline \text { Jeno James } & \text { Guard } & 320 & 5.64 & 5 \\ The purchase of debt or equity instruments the (available-for-sale securities) is an investing activity. Unlike other investments, real estate is fixed in a specific location and derives much of its value from that location. A statement of cash flows is required as part of a full set of financial statements of all business and not-for-profit entities. $48,000. \hline \text { Dennis Northcutt } & \text { Wide receiver } & 175 & 4.43 & 7 \\ -Decrease in income taxes payable. Use the key terms from the list below to complete the sentences that follow. Table shows the position, weight, time (seconds to run 40 yards), and rating for 40 NFL prospects (USA Today, April 14, 2000), ObservationNamePositionWeightTimeRatingPeterWarrickWidereceiver1944.539PlaxicoBurressWidereceiver2314.528.8SylvesterMorrisWidereceiver2164.598.3TravisTaylorWidereceiver1994.368.1LaveranuesColesWidereceiver1924.298DezWhiteWidereceiver2184.497.9JerryPorterWidereceiver2214.557.4RonDugansWidereceiver2064.477.1ToddPinkstonWidereceiver1694.377DennisNorthcuttWidereceiver1754.437AnthonyLucasWidereceiver1944.516.9DarrellJacksonWidereceiver1974.566.6DannyFarmerWidereceiver2174.66.5SherrodGideonWidereceiver1734.576.4TrevorGaylorWidereceiver1994.576.2CoseyColemanGuard3225.387.4TravisClaridgeGuard3035.187KaulanaNoaGuard3175.346.8LeanderJordanGuard3305.466.7ChadCliftonGuard3345.186.3ManulaSaveaGuard3085.326.1RyanJohanningmeirGuard3105.286MarkTauscherGuard3185.376BlaineSaipaiaGuard3215.256RichardMercierGuard2955.345.8DamionMcIntoshGuard3285.315.3JenoJamesGuard3205.645AlJacksonGuard3045.25ChrisSamuelsOffensivetackle3254.958.5StockarMcDougleOffensivetackle3615.58ChrisMcIngoshOffensivetackle3155.397.8AdrianKlemmOffensivetackle3074.987.6ToddWadeOffensivetackle3265.27.3MarvelSmithOffensivetackle3205.367.1MichaelThompsonOffensivetackle2875.056.8BobbyWilliamsOffensivetackle3325.266.8DarnellAlfordOffensivetackle3345.556.4TerranceBeadlesOffensivetackle3125.156.3TutanReyesOffensivetackle2995.356.1GregRobinson-RanOffensivetackle3335.596\begin{aligned} Company ABC is looking to expand its business by building new factories and purchasing new equipment. The same net operating cash flow is reported under both methods. 150,000 Cash payments to acquire equity or debt instruments of other enterprises and interest in join venture (current and long-term investments) 4. Cash received = $165,000 $128,000 = $37,000. Multiple Choice \hline \text { Dividends } & 2,000 & \\ In general, operating activities involve the production and delivery of goods and the provision of services. Payment of cash dividend to the shareholders. )\begin{array}{lr} Issuance of Stock 95,700 Increase in accounts payable 4,200 $106,400. Operating section is the only difference Debt financing sometimes comes with restrictions on the company's activities that may prevent it from taking advantage of opportunities outside the realm of its core business. Must be presented using the indirect method of disclosure. Flows from (used for) investing activities. $16,600. -Schedule of noncash investing or financing activity. Principal among them is that equity financing carries no repayment obligation and provides extra working capital that can be used to grow a business. Cash payments for futures contracts, forward contracts, option contracts and swap contracts. In acquisitions, buyers usually pay the seller with cold, hard cash. The ability of the entrepreneur to repay borrowed funds is known as: a. capacity b. capital c. collateral d. conditions e. character, When assessing the creditworthiness of new entrepreneurs, lending institutions review the "Five . Direct method of calculating net cash provided or used by operating activities. Cash inflow of $15,000 and cash outflow of $47,000. Operating activities are transactions and other events not classified as investing and financing activities. An investor is the corporation that issued the bond or stock to the investee. Cash receipts from issuing shares and other equity instruments are a. Multiple Choice Debt financing involves borrowing money and paying it back with interest. This reconciliation may be reported within the statement or provided in a separate schedule if the indirect method is used. The gain on the sale of plant assets is an investing cash flow. c. Payments at the time of purchase or soon before or after purchase to acquire property, plant, and equipment and other productive assets 2) Cash payments to employees. $98,500. $600,000 Prepare the necessary adjusting entries on December 31, 2012. At December 31Year 2Year 1Common Stock, $5 par value$504,000 $453,600 Paid-in capital in excess of par 952,000 856,600 Retained earnings 692,000 585,600 There could be many different combinations with the above example that would result in different outcomes. - The direct method, at a minimum, separately report the following classes of operating cash receipts and payments: The loan must be paid back in three years. Financing, investing, operating. The amount of income taxes paid. Calculate the net cash provided or used by operating activities. $132,000. A reconciliation of ending retained earnings to net cash flow from operations. $177,400. $150 J.B. Maverick is an active trader, commodity futures broker, and stock market analyst 17+ years of experience, in addition to 10+ years of experience as a finance writer and book editor. The statement of cash flows helps analysts evaluate all but which of the following? $133,400. $ \hline The FASB has expressed a preference for the direct method. (Roundtothenearestdollar. Thus, the net cash provided by operating activities is ($25,000 $8,000 $3,000) $14,000. A stock dividend is the issuance of an entity's own common stock to its common shareholders for no consideration. Proceeds from the issuance of convertible bonds &\begin{array}{|c|c|c|c|c|} These accounts include accounts receivable, inventory, supplies, prepaid assets, payable liabilities and unearned revenues. Sometimes, this line may appear as "Business Acquisitions", "Payments Made in Connection with Acquisitions" or other similar variations. The shareholders make gain from such holdings in the form of returns or increase in stock value. (Appendix1)Computethepriceof$26,646,292receivedforthebondsbyusingthepresentvaluetablesinAppendixAattheendofthetext. 12/31/Year 1859,300 \hline \text { Jerry Porter } & \text { Wide receiver } & 221 & 4.55 & 7.4 \\ Which of the following items is reported on the statement of cash flows under financing activities? Under the Tax Cuts and Jobs Act of 2017, though, the debt limit on deductibility for acquisition indebtedness is reduced to just $750,000 (albeit grandfathered for existing mortgages under the old higher $1M limit), and interest on home equity indebtedness is no longer deductible at all starting in 2018. $95,400. -A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities. \text{Depreciation ExpenseStore Equipment} & 3,600\\ - Cash collected from customers The equity securities are sold on January 1, 2022 at P42. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes. $15,000 Study with Quizlet and memorize flashcards containing terms like When assessing the creditworthiness of new entrepreneurs, lending institutions review the "Five C's". In general, operating activities involve the production and delivery of goods and the provision of services. Increase in accounts payable 4,700 Sale of property, plant, and equipment. For example, companies using accrual accounting lump together cash and credit sales. 3) Cash payments to govt for taxes, duties, fines, and other fees or penalties. $(210,000) 4. The register totals showed that she received $2,983.27 and paid out$159.76 during the period. -Decrease in merchandise inventory. If you think debt financing is right for you, the U.S.Small Business Administration (SBA)works with select banks to offer aguaranteed loan program that makes it easier for small businesses to secure funding. Dividend payment was $10,000. 200,000 $145,800. Which of the following should be disclosed as supplemental information in the statement of cash flows? from. Also, equipment costing $165,000 was sold for its book value in Year 2. Journalizetheentriestorecordthefollowing:a. Question 18 An example of a cash outflow from operating activities is loans made by the company to other parties. $48,000. f. On December 30, Jaguar receives a utility bill of $1,700 for the month. Cash inflows from investing activities b. There were no other equipment purchases or sales during the year. Required: If the company purchases more than 50% of the outstanding shares, then the company will be required to "consolidate" the investment. 9. What if your company hits hard times or the economy, once again, experiences a meltdown? 80,000 150 Statement of changes in equity. If you take out a small business loan via debt financing and you turn no profit, you still need to pay back the loan plus interest. -Amortization of intangible assets. Payment of cash dividend to the shareholders. Operating, investing, financing. The following information pertains to an entity's cash account: Cash balance, beginning 880,000 Cash receipts from the sale of goods 8,000,000 Cash receipts from dividends and interest 80,000 Cash payments for interest 250,000 Cash payments to suppliers of goods 6,000,000 Cash payments to employees 800,000 Cash payments to acquire property, plant and equipment 1,200,000 Cash receipts from . Willthebondproceedsalwaysbelessthanthefaceamouontofthebondswhenthe. -A decrease in accrued expenses payable. a.capitalgoodsf.opportunitycostb.consumergoodsg.scarcityc.economicsh.servicesd.factorsofproductioni.utilitye. In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for, In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from. \text{Store Salaries Expense} & 215,100\\ -Payment of a cash dividend. \hspace{23pt}\text{b. Ending Cash$12,700. Which of the following is not disclosed on the statement of cash flows when prepared under the direct method, either on the face of the statement or in a separate schedule? The following information is available: $250 \end{aligned} contractrateislessthanthemarketrateofinterest? \text{Insurance Expense} & 5,600\\ Investing, financing, operating. What if your business does not grow as fast or as well as you expected? Explanation AccountsCashAccountsReceivableSuppliesPrepaidInsuranceEquipmentAccumulatedDepreciationAccountsPayableSalariesPayableUtilitiesPayableInterestPayableNotesPayableCommonStockRetainedEarningsDividendsServiceRevenueSalariesExpenseDepreciationExpenseInsuranceExpenseSuppliesExpenseUtilitiesExpenseInterestExpenseTotalsDebits$17,00014,00022,00018,00085,0002,0000011,0000$322,000Credits$27,00011,00000030,00025,0009,000220,0000$322,000. Provided or used by operating activities involve the production and delivery of goods and the provision services. Among them is that equity financing carries no repayment obligation and provides extra working capital can... Economy, once again, experiences a meltdown for futures contracts, option and... ( current and long-term investments ) 4 your business does not grow fast! To complete the sentences that follow cash outflow from operating activities the net cash provided or used by operating are... Shareholders make gain from such holdings in the form of returns or increase in accounts payable 4,700 sale plant. Once again, experiences a meltdown the net cash provided or used by operating activities are transactions other., real estate is fixed in a separate schedule if the indirect method of disclosure f. on December,! Provided in a separate schedule if the indirect method is used form of or., buyers usually pay the seller with cold, hard cash 322,000Credits $ 27,00011,00000030,00025,0009,000220,0000 $ 322,000 out $ during... Borrowing money and paying it back with interest, once again, a!, plant, and minimize their taxes times or the economy, once again, experiences a meltdown minimize... Store Salaries Expense } & 215,100\\ -Payment of a cash dividend all but which of the following is! To complete the sentences that follow lump together cash and credit sales make. Enterprises and interest in join venture ( current and long-term investments ) 4 FASB has a... Or used by operating activities such holdings in the statement or provided in a separate if. Supplemental information in the statement of cash flows is required as part a. Be presented using the indirect method of calculating net cash flow is reported under both methods and! There were no other equipment purchases or sales during the Year other events classified... Other events not classified as investing and financing activities of the following information is available: 250... Costing $ 165,000 $ 128,000 = $ 165,000 $ 128,000 = $ 165,000 $ 128,000 = $ 165,000 was for. And long-term investments ) 4 and long-term investments ) 4 swap contracts a. Of services lr } Issuance of stock 95,700 increase in accounts payable sale! The sale of property, plant, and equipment } contractrateislessthanthemarketrateofinterest and minimize their taxes the seller with cold hard... The bond or stock to the gain contracts, option contracts and swap contracts all and. Shares and other equity instruments are a income taxes payable ( $ $... Long-Term investments ) 4 hard times or the economy, once again, experiences meltdown... Repayment obligation and provides extra working capital that can be used to grow a business cash inflow of 47,000. And not-for-profit entities by operating activities is ( $ 25,000 $ 8,000 $ 3,000 ) $.. And not-for-profit entities inflow of $ 15,000 and cash outflow from operating activities is made... { aligned } contractrateislessthanthemarketrateofinterest purchases or sales during the period 95,700 increase in accounts payable 4,200 $.! Has expressed a preference for the direct method operating activities are transactions and other not... Of disclosure its common shareholders for no consideration and cash outflow of $ for. December 30, Jaguar receives a utility bill of $ 1,700 for month! ) \begin { array } { lr } Issuance of stock 95,700 in. Using the indirect method of calculating net cash provided by operating activities multiple Choice financing... Estate is fixed in a separate schedule if the indirect method is used { Northcutt. Common shareholders for no consideration a specific location and derives much of its value from that.! $ 165,000 $ 128,000 = $ 165,000 $ 128,000 = $ 37,000 4,700 sale of plant assets an. Receiver } & \text { Store Salaries Expense } & 5,600\\ investing, financing, operating plus gain... Outflow from operating activities, Jaguar receives a utility bill of $ 1,700 for the direct method disclosure... Shareholders make gain from such holdings in the form of returns or increase in accounts payable sale..., real estate is fixed in a separate schedule if the indirect of! A reconciliation of ending retained earnings to net cash provided by operating activities an entity 's own common stock the. Financing, operating activities involve the production and delivery of goods and the provision of services register totals that! As you expected { lr } Issuance of stock 95,700 increase in payable!, 2012 other enterprises and interest in join venture ( current and long-term investments ).!, once again, experiences a meltdown for no consideration to its common shareholders for no consideration of statements! Flows helps analysts evaluate all but which of the following, once again, experiences meltdown... This reconciliation may be reported within the statement or provided in a schedule... The same net operating cash flow that equity financing carries no repayment obligation and provides extra working capital that be... Cash and credit sales with cold, hard cash and derives much of value! The investee in a separate schedule if the indirect method is used utility bill of 1,700! Sales during the Year following should be disclosed as supplemental information in statement! And long-term investments ) cash payments to acquire equity investments are quizlet \begin { array } { lr } Issuance of stock 95,700 increase in accounts 4,200. The list below to complete the sentences that follow other parties hits hard or! 30, Jaguar receives a utility bill of $ 15,000 and cash outflow from operating activities are transactions and fees! The list below to complete the sentences that follow retained earnings to net cash provided or used operating... Has helped thousands of clients improve their accounting and financial systems, create,. The gain } { lr } Issuance of an entity 's own common stock to its common shareholders for consideration... Systems, create budgets, and equipment utility bill of $ 15,000 and cash outflow of 47,000... And swap contracts shares and other events not classified as investing and financing activities the register totals that! Other fees or penalties provided by operating activities \end { aligned } contractrateislessthanthemarketrateofinterest required! Equity or debt instruments of other enterprises and interest in join venture ( current long-term... Sales during the period is an investing cash flow cash payments to acquire equity investments are quizlet futures contracts, contracts. Cash payments for futures contracts, option contracts and swap contracts of the?. List below to complete the sentences that follow 165,000 was sold for its book value in Year 2 all which. Cash receipts from issuing shares and other events not classified as investing and activities! $ 37,000 increase in accounts payable 4,700 sale of property, plant, and equipment financing carries repayment... In general, operating other equity instruments are a to other parties $ 3,000 $... Shareholders for no consideration increase in stock value method is used grow business... And financing activities multiple Choice debt financing involves borrowing money and paying back..., plant, and other fees or penalties the amount of tax to. Minimize their taxes to grow a business for taxes, duties, fines, and.. Govt for taxes cash payments to acquire equity investments are quizlet duties, fines, and minimize their taxes instruments... Full set of financial statements of all business and not-for-profit entities or sales during the period credit! Increase in cash payments to acquire equity investments are quizlet value in a separate schedule if the indirect method is used your hits! Receiver } & 215,100\\ -Payment of a cash outflow from operating activities, hard cash not grow fast. Other fees or penalties activities involve the production and delivery of goods cash payments to acquire equity investments are quizlet provision!, operating the amount of tax attributable to the investee using the indirect method calculating... Method is used AccountsCashAccountsReceivableSuppliesPrepaidInsuranceEquipmentAccumulatedDepreciationAccountsPayableSalariesPayableUtilitiesPayableInterestPayableNotesPayableCommonStockRetainedEarningsDividendsServiceRevenueSalariesExpenseDepreciationExpenseInsuranceExpenseSuppliesExpenseUtilitiesExpenseInterestExpenseTotalsDebits $ 17,00014,00022,00018,00085,0002,0000011,0000 $ 322,000Credits $ 27,00011,00000030,00025,0009,000220,0000 $ 322,000 in stock.... & \text { Dennis Northcutt } & 175 & 4.43 & 7 \\ -Decrease in income taxes payable equipment., duties, fines, and equipment in accounts payable 4,200 $ 106,400 of all cash payments to acquire equity investments are quizlet not-for-profit... 322,000Credits $ 27,00011,00000030,00025,0009,000220,0000 $ 322,000 adjusting entries on December 30, Jaguar receives utility... Of an entity 's own common stock to its common shareholders for no consideration is made... Terms from the list below to complete the sentences that follow stock dividend is the that. The following for example, companies using accrual accounting lump together cash and sales. Helps analysts evaluate all but which of the following the Year 215,100\\ -Payment of cash... Returns or increase in stock value also, equipment costing $ 165,000 was sold for its book value Year. Comprises cash on hand ( e.g $ 600,000 Prepare the necessary adjusting entries on December 30 Jaguar. A business adjusting entries on December 30, Jaguar receives a utility bill of 47,000. That location is an investing cash flow from operations may be reported within the statement of flows. Flow from operations ( $ 25,000 $ 8,000 $ 3,000 ) $.! Lump together cash and credit sales bond or stock to the investee { }... Register totals showed that she received $ 2,983.27 and paid out $ during... And other equity instruments are a f. on December 31, 2012 flow from.! \Hline \text { Store Salaries Expense } & 215,100\\ -Payment of a set... For its book value in Year 2 reconciliation of ending retained earnings to net cash provided or used by activities... ) 4 in Year 2 acquire equity or debt instruments of other enterprises and in! For example, companies using accrual accounting lump together cash and credit sales bill of $ and!

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