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Provide full debits and credits CASH ACCRUAL OUTFLOW 11 An old factory is reopened and refurbished for 20 in cash 20 20 and the costs
Provide full debits and credits
CASH | ACCRUAL |
OUTFLOW | ||||||||
11 | An old factory is reopened and refurbished for 20 in cash | 20 | 20 | |||||
and the costs qualify as an EXPENSE | ||||||||
This activity must be recorded in the Income Statement. | ||||||||
INFLOW | ||||||||
12 | An old Factory is sold for 60 in cash, at a gain of 30 | 60 | 30 | |||||
The fair value and sales price was 100 | 100 | 100 | ||||||
The accumulated depreciation was 40 | 40 | 30 | ||||||
The original acquisition cost for the asset was 70 | 70 | 70 | ||||||
The net carrying amount of the asset on the books at the time of the sale is (70-40) = 30. The sales price is 60. Therefore the gain on sale is 30. | ||||||||
This GAIN must be recorded in the Income Statement. | ||||||||
OUTFLOW | ||||||||
13 | Equipment for the factory is purchased for cash, 50. | 10 | 10 | |||||
It is an investment or asset purchase. Its deprecciation is | ||||||||
considered included in the Depreciation Expense. | ||||||||
14 | An an investment is made in a debt security | |||||||
It does NOT qualify as a Cash Equivalent. IT will be recognized on the Balance Sheet in the | OUTFLOW | |||||||
Marektable Securities Account. It is purchased for Cash. | 30 | 30 | ||||||
All Marketable Securities are "Available for Sale" |
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