Trumpie Company completed the following transactions during 2016: * Distributed and paid dividends to its shareholders...

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Trumpie Company completed the following transactions during 2016: * Distributed and paid dividends to its shareholders $60 000; * Sold an old equipment for $12 000 (the updated carrying amount prior to its sale was $22 000); * Raised funding by issuing fixed-rate bonds to overseas investors $550 000. Trumpie uses the indirect method to prepare the operating activities section of the statement of cash flows. The following statements describe how Trumpie's new accountant is likely to report the cash flow effects of the transactions above on its 2016 statement of cash flows. Which of the following is correct? O The disposal of this non-current asset is a divestiture, as a consequence this transaction changes exclusively the Investing Activities section of its statement of cash flow. O Overseas bonds proceeds are not included in the cash flow statement as it involves investors' financial resources which in turn refer to the company's equity. Hence, it appears on the Statement of Changes in Equity. O The effect from the disposal of this non-current asset is twofold: it requires an adjustment to the net profitloss within the Operating Activities part as well as it increases the cashfiow in the Investing Activities section. O Payment of dividends is part of the Investing Activities, which remains the same no matter the method the company chooses to prepare its cash flow statement. Trumpie Company completed the following transactions during 2016: * Distributed and paid dividends to its shareholders $60 000; * Sold an old equipment for $12 000 (the updated carrying amount prior to its sale was $22 000); * Raised funding by issuing fixed-rate bonds to overseas investors $550 000. Trumpie uses the indirect method to prepare the operating activities section of the statement of cash flows. The following statements describe how Trumpie's new accountant is likely to report the cash flow effects of the transactions above on its 2016 statement of cash flows. Which of the following is correct? O The disposal of this non-current asset is a divestiture, as a consequence this transaction changes exclusively the Investing Activities section of its statement of cash flow. O Overseas bonds proceeds are not included in the cash flow statement as it involves investors' financial resources which in turn refer to the company's equity. Hence, it appears on the Statement of Changes in Equity. O The effect from the disposal of this non-current asset is twofold: it requires an adjustment to the net profitloss within the Operating Activities part as well as it increases the cashfiow in the Investing Activities section. O Payment of dividends is part of the Investing Activities, which remains the same no matter the method the company chooses to prepare its cash flow statement.

Answer rating: 100% (QA)

The effect from the disposal of this noncurrent asset is twofold it requires an adjustment to th... View the full answer