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    Cost Basis, Bond Redemption, Cash Flow From Operating Activities

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    1) A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of _______.
    $92,000
    $91,000
    $87,000
    $86,000

    2) Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?
    $1,100 loss
    $1,100 gain
    $8,000 loss
    $8,000 gain

    3) The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

    End
    Beginning

    Cash
    $ 50,000
    $ 60,000

    Accounts receivable
    112,000
    108,000

    Inventories
    105,000
    93,000

    Prepaid expenses
    4,500
    6,500

    Accounts payable (merchandise creditors)
    75,000
    89,000

    What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
    $271,000
    $279,000
    $327,000
    $256,000

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    https://brainmass.com/business/financial-accounting-bookkeeping/cost-basis-bond-redemption-cash-flow-from-operating-activities-223385

    Solution Preview

    1. Cost is all amount spent in getting the machine ready for use. The cost is = 77,000+8,000+5,000+2,000 = 92,000

    2. The carrying value of the ...

    Solution Summary

    The solution explains some multiple choice questions relating to cost basis, bond redemption and cash flow from operating activities

    $2.19

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