Portions of the financial statements for Parnell Company are provided below.
|For the Year Ended December 31, 2016|
|($ in 000s)|
|Revenues and gains:|
|Gain on sale of buildings||$12||$852|
|Expenses and loss:|
|Cost of goods sold||$320|
|Loss on sale of machinery||$11||$680|
|Income before tax||$172|
|Income tax expense||$86|
|Selected Accounts from Comparative Balance Sheets|
|December 31, 2016 and 2015|
|Year ($ in 000s)|
|Deferred income tax liability||68||56||12|
1. Prepare the cash flows from the operating activities section of the statement of cash flows for Parnell Company using the direct method.
2. Prepare the cash flows from the operating activities section of the statement of cash flows for Parnell Company using the indirect method.
Cash Flow Statement:
Cash flow statements help the business entity to plan its cash position in the upcoming financial year. It analyses the cash flow generated by operating, financing, and investing activities.
Answer and Explanation: 1
The cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method is shown below.
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fromChapter 14 / Lesson 4
A company's cash flow statements must meet specific disclosure requirements to be of use to investors. Review the statement of cash flows, what must be disclosed, and non-cash investing/financing with examples.