CFA CFA Level 1 CFO given the following information, a bit stumped

CFO given the following information, a bit stumped

  • This topic has 2 replies, 2 voices, and was last updated Jan-18 by malkadhi.
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  • malkadhi
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    So I was working through some of the practice questions, and I don’t know why they didn’t take into consider loss on equipment sale as an outflow. Question is as follows:

    Proceeds from sale of
    equipment: 32000

    Loss on equipment sale:
    9000

    Dividends paid: 12500

    Purchase of office
    premises: 100000

    Common Stock
    repurchases: 45000

    Dividends received:
    8500

    Interest received: 1200

    Supplier accounts paid:
    3700

    Cash collections from
    customers: 14200

    Ending Cash balance:
    98000

    Answer:

    CFI=32000-100000=-68000

    simply_complex2
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    gains or losses on sales of equipment are non cash charges (they are just the difference between what the asset is recorded on the balance sheet and the cash the company gets paid for the asset) so they generally aren’t reported on the cash flow statement. instead you’d see proceeds from the sales on the CF statement

    malkadhi
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    Thanks! Completely spaced out on that one.

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