Investing Activities and Depreciable Assets

Verlando Company had the following account balances and information available for 2016:

		January 1, 2016		December 31, 2016
Land		$45,000		$ 85,000
Buildings and equipment		100,000		210,000
Accumulated depreciation: buildings and equipment		50,000		36,000
Investment in available-for-sale securities		16,000		29,000
Patents, net		10,000		25,200
Unrealized gain on available-for-sale securities		500		2,300
Retained earnings		150,000		200,000

During 2016, Verlando recorded the following transactions affecting these accounts:

Land with a carrying value of $35,000 was sold at a loss of $6,000.

Land and equipment were purchased with cash during the period.

Equipment with an original cost of $20,000 that had a book value of $4,000 was written off as obsolete.

A building with an original cost of $60,000 and accumulated depreciation of $25,000 was sold at a $23,000 gain.

Depreciation expense and amortization expense were recorded.

Net income for the year was $60,000.

A patent was acquired during the year in exchange for 1,200 shares of common stock with a par value of $1 per share and a market value of $26 per share.

Additional marketable securities were purchased during the year.

Verlando Company has no notes payable in the liabilities section of its balance sheet.

Required:

1. Assuming that Verlando uses the indirect method to determine operating cash flows, what is the amount of depreciation expense and amortization expense that would be added back to net income?

Depreciation expense for the period $

Amortization expense for the period $

2. Prepare the investing activities section of the statement of cash flows for the year ended December 31, 2016. For those boxes in which you must enter subtractive or negative numbers use a minus sign.

Investing Activities:
Proceeds from sale of land	$
Payment for purchase of land
Proceeds from sale of a building
Payment for purchase of buildings and equipment
Payment for available-for-sale securities
Net cash used for investing activities	$

3. Prepare the disclosure for significant noncash transactions for the statement of cash flows for the year ended December 31, 2016.

Schedule 1: Investing and Financing Activities Not Affecting Cash
Investing Activities:
Acquisition of patent by issuance of common stock	$
Financing Activities:
Issuance of common stock for patent