For each transactionbelow, write the net effect on Current Assets (CA), Total Assets,Net Income Before Taxes (NI pretax), Cash flows from operatingactivities (CFO), and Cash flows from investing activities(CFI).
- Write only the effect for the current period.
- Assume the company is a merchandising firm.
- If the net effect is negative, include a negative sign. If noeffect, write 0.
- For CFO and CFI, positive net inflows are positive, net cashoutflows are negative.
- For classifying interest expense, assume U.S. GAAPconventions.
Transaction | CA | Total Assets | NI (pretax) | CFO | CFI |
Pay $25 to improve apiece of machinery | Answer | Answer | Answer | Answer | Answer |
Impair a plot of landfrom $75 down to $20 | Answer | Answer | Answer | Answer | Answer |
Pay $82 for deliverytruck
($80 price + $2 delivery) | Answer | Answer | Answer | Answer | Answer |
Recognize $25 ofwarranty expense (Company has Warranty Reserve liability) | Answer | Answer | Answer | Answer | Answer |
Sell a store locationwith net book value of $92 for $110 in cash |
