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16 November, 10:23

Carter Containers sold marketable securities, land, and common stock for $30 million, $15 million, and $40 million, respectively. Carter also purchased treasury stock, equipment, and a patent for $21 million, $25 million, and $12 million, respectively. What amount should Carter report as net cash from investing activities?

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  1. 16 November, 10:50
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    The $8 million is the amount which should Carter report as net cash from investing activities.

    Explanation:

    Cash flow from investing activities : It includes all types of transactions whether it is a sale or purchase of fixed assets and intangible assets.

    So, the net cash flow amount from investing activities is equals to

    = Sale of marketable securities + Sale of land - Purchase of equipment - purchase of patent

    = $30 million + $15 million - $25 million - $12 million

    = $8 million

    The sale of common stock and purchase of treasury stock is a part of financing activities. Hence, it is not considered in the computation part.

    Thus, the $8 million is the amount which should Carter report as net cash from investing activities.
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