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

During 2016, Verlando recorded the following transactions affecting these accounts:
a. Land with a carrying value of $35,000 was sold at a loss of $6,000.
b. Land and equipment were purchased with cash during the period.
c. Equipment with an original cost of $20,000 that had a book value of $4,000 was written off as obsolete.
d. A building with an original cost of $60,000 and accumulated depreciation of $25,000 was sold at a $23,000 gain,
e. Depreciation expense and amortization expense were recorded.
f. Net income for the year was $60,000.
g. 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.
h. Additional marketable securities were purchased during the year.
i. Verlando Company has no notes payable in the liabilities section of its balance sheet.
Required:
1. Next Level 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?
2. Prepare the investing activities section of the statement of cash flows for the car ended December 31,2016.
3. Prepare the disclosure for significant noncash transactions for the statement of cash flows for the year ended December 31, 2016.

Transcribed Image Text:

January 1, 2016 December 31, 2016 land Buildings and equipment Accumulated depreciation: buildings and equipment Investment in availablefor-sale securities Patents, net Unreali zed gain on availableforsale securities Relained eamings $ 45,000 100,000 50,000 16,000 10,000 $85,000 210,000 36,000 29,000 25,200 500 2,300 150,000 200,000