Determining Net Cash Flow from Investing Activities Davis Inc. reported the following information: 12/31/2019 12/31/2018 Equipment $160,000 $115,000 Accumulated depreciation (85,000) (59,000) Investment (long-term) 18,610 10,000 In addition, Davis sold equipment costing $12,500 with accumulated depreciation of $6,150 for $2,390 cash, producing a $3,960 loss. Davis reported net income for 2019 of $122,350. Required: Compute net cash flow from investing activities. Use a minus sign to indicate negative cash flows (outflows).

Question

Valeria Lloyd

Business

4 May, 18:34

Determining Net Cash Flow from Investing Activities Davis Inc. reported the following information: 12/31/2019 12/31/2018 Equipment $160,000 $115,000 Accumulated depreciation (85,000) (59,000) Investment (long-term) 18,610 10,000 In addition, Davis sold equipment costing $12,500 with accumulated depreciation of $6,150 for $2,390 cash, producing a $3,960 loss. Davis reported net income for 2019 of $122,350. Required: Compute net cash flow from investing activities. Use a minus sign to indicate negative cash flows (outflows).

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Answers (1)

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Joslyn Rose · Answer 1

-$63,270

Explanation:

The computation of the net cash flow from investing activities is presented below:

Cash flow from investing activities

Sale of an equipment $2,390

Purchase of an investment - $8,610 ($18,610 - $10,000)

Purchase of an equipment - $57,500

Net cash flow used by investing activities - $63,270

The purchase of an equipment is

= $160,000 - $11,5000 + $12,500

= $57,500