For Each of the Following Transactions, Determine What Adjustment Is

question 17

Essay

For each of the following transactions, determine what adjustment is necessary to prepare the statement of cash flows using the indirect method.

a. Firm A sells equipment with a cost of $1,000 and accumulated depreciation of $800 for $400 cash.
b. Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,000 as equity in earnings of affiliate. No dividends are paid by B.
c. Firm A acquires a building through a capital lease transaction. The building and lease were recorded at $100,000. Firm A chooses to report this transaction in the statement of cash flows.

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Definitions:

Cognitive Development

The method through which people interpret, contemplate, and comprehend their environment by the interplay and impact of inherited and acquired elements.

Tertiary Circular Reactions

Repetitive behaviors in infants aimed at exploring and mastering new abilities and understanding the outcome of actions.

Imitation Reflex

An innate tendency of infants to mimic gestures or facial expressions as a fundamental learning process.

Mirror Neurons

Neurons that fire both when an individual performs an action and when they observe the same action performed by another, thought to be the basis of empathy and learning through imitation.