ACC 5115, Spring/Summer 2022

Research Case Statement of Cash Flows

You are a staff accountant in the corporate controllers office at Gamma Ten Corporation, an energy exploration and extraction company. Gamma Ten reports the following:

Gamma Ten Corporation

Income Statement

for the year ended December 31, 2022 ($ millions)

Sales revenue$ 2,499.5

Cost of goods sold 2,100.9

Gross profit398.6

General and administrative expenses 51.9

Income from operations346.7

Other revenues, expenses and losses:

Interest expense(55.4)

Losses from disposals of fixed assets(9.9)

Income from equity method investment1.1

Losses from nationalization of foreign assets (137.4)

Income before income taxes145.1

Income tax expense:

Current8.8

Deferred29.338.1

Net income$ 107.0

Note the following:

Gamma Tens cost accounting system collects many personnel and facility charges into cost of goods sold. Cost of goods sold includes $142.5 of depreciation and depletioncharges, $20.3 million of amortization charges on limited life intangible assets, and $1.1 million of pension expense.

General and administrative expenses includes $4.9 million of depreciation charges and $0.3 million of pension expense.

Losses from disposals of fixed assets includes $9.2 million of losses incurred in various transactions when Gamma Tensold assets with $36.1 million of book value for $26.9 million in cash. The remaining $0.7 million resulted from the exchange of land to settle an asset retirement obligation (see below).

Gamma Ten declared and paid $59.0 million of common dividends in 2022.

Gamma Ten Corporation

Balance Sheet

as of December 31, ($ millions)

2022 2021

Cash$ 200.8$ 233.7

Accounts receivable, net523.4503.6

Inventories302.8239.6

Other current assets 88.1 100.8

Total current assets 1,115.1 1,077.7

Property, plant, and equipment, net of

accumulated depreciation and depletion1,896.11,852.1

Equity method investment8.4

Deferred income taxes138.4167.7

Intangible assets 166.1 186.4

Total assets$ 3,324.1$ 3,283.9

Accounts payable$ 301.8$ 255.4

Accrued employee compensation and benefits71.474.6

Income taxes payable24.823.1

Current maturities of long term debt3.651.2

Other current liabilities 78.6 81.9

Total current liabilities480.2486.2

Long term debt1,042.11,043.0

Net pension liability 58.3 60.9

Total liabilities1,580.61,590.1

Common stock, $2 par value267.1267.1

Additional paid-in capital21.120.7

Retained earnings2,129.72,081.7

Treasury stock, at cost (674.4) (675.7)

Total shareholders equity 1,743.5 1,693.8

Total liabilities and shareholders equity$ 3,324.1$ 3,283.9

Note the following:

Gamma Ten paid $597.5 million in cash to purchase property, plant and equipment assets during 2022.

Gamma Ten paid $51.2 million to retire long term debt in 2022, and borrowed $2.6 million in new debt on long term notes.

Gamma Ten contributed $4.0 million cash into its pension fund in 2022. There are no OCI or accumulated OCI balances relating to the pension plan.

The only stock transaction in 2022 occurred when Gamma Ten exchanged common stock from the treasury for property, plant and equipment assets with a fair value of $1.7 million.

You have been assigned the task of drafting the statement of cash flows for 2022. Information has been provided to you about the following transactions.

Nationalization of foreign investments

In August of 2022, a mining operation in an overseas territory was nationalized by the local government. Gamma Ten had insurance against such an event, and recorded the followingupon settlement of the claim:

Cash300,000,000

Accumulated depreciation79,400,000

Unusual loss forfeiture of foreign assets137,400,000

Land68,000,000

Buildings and equipment97,400,000

Natural resources mineral deposit283,000,000

Inventory68,400,000

The amount of the insurance settlement was determined as follows, based on fair values of the assets forfeited:

Land$ 10,000,000

Buildings and equipment30,000,000

Natural resources170,000,000

Inventory 90,000,000

Total$300,000,000

Nationalization of Foreign Assets:

please help with:

Support the treatment of this via research in the GAAP Codification database You must cite specific sections of the GAAP codification database in your answer by number. For instance, the section for Statement of Cash Flows Overall Scope and Scope Exceptions is 230-10-15.