You are a staff accountant in the corporate controller’s

You are a staff accountant in the corporate controller’s office at Gamma Ten Corporation, an energy exploration, and extraction company. Gamma Ten reports the following:
Gamma Ten Corporation
Income Statement
for the year ended December 31, 2022 ($ million)
Sales revenue $ 2,499.5
Cost of goods sold 2,100.9
Gross profit 398.6
General and administrative expenses 51.9
Income from operations 346.7
Other revenues, expenses, and losses:
Interest expense (55.4)
Losses from disposals of fixed assets (9.9)
Income from equity method investment 1.1
Losses from the nationalization of foreign assets (137.4)
Income before income taxes 145.1
Income tax expense:
Current 8.8
Deferred 29.3 38.1
Net income $ 107.0
Note the following:
 Gamma Ten’s cost accounting system collects many personnel and facility charges into the cost of goods sold. The cost of goods sold includes $142.5 of depreciation and depletion charges, $20.3  million of amortization charges on limited life intangible assets, and $1.1 million of pension expenses.
 General and administrative expenses include $4.9 million of depreciation charges and $0.3  million of pension expenses.
 Losses from disposals of fixed assets include $9.2 million of losses incurred in various transactions when Gamma Ten sold assets with $36.1 million of book value for $26.9 million in cash. The remaining $0.7 million resulted from the exchange of land to settle an assetretirement obligation (see below).
 Gamma Ten declared and paid $59.0 million of common dividends in 2022.

Gamma Ten Corporation
Balance Sheet
as of December 31, ($ millions)
2022 2021
Cash $ 200.8 $ 233.7
Accounts receivable, net 523.4 503.6
Inventories 302.8 239.6
Other current assets 88.1 100.8
Total current assets 1,115.1 1,077.7
Property, plant, and equipment, net of
accumulated depreciation and depletion 1,896.1 1,852.1
Equity method investment 8.4
Deferred income taxes 138.4 167.7
Intangible assets 166.1 186.4
Total assets $ 3,324.1 $ 3,283.9
Accounts payable $ 301.8 $ 255.4
Accrued employee compensation and benefits 71.4 74.6
Income taxes payable 24.8 23.1
Current maturities of long-term debt 3.6 51.2
Other current liabilities 78.6 81.9
Total current liabilities 480.2 486.2
Long term debt 1,042.1 1,043.0
Net pension liability 58.3 60.9
Total liabilities 1,580.6 1,590.1
Common stock, $2 par value 267.1 267.1
Additional paid-in capital 21.1 20.7
Retained earnings 2,129.7 2,081.7
Treasury stock, at cost (674.4) (675.7)
Total shareholders’ equity 1,743.5 1,693.8
Total liabilities and shareholders’ equity $ 3,324.1 $ 3,283.9
Note the following:
 Gamma Ten paid $597.5 million in cash to purchase property, plant, and equipment assets during 2022.
 Gamma Ten paid $51.2 million to retire long-term debt in 2022 and borrowed $2.6 million in new debt on long-term notes.
 Gamma Ten contributed $4.0 million cash into its pension fund in 2022. There are no OCI or accumulated OCI balances relating to the pension plan.
 The only stock transaction in 2022 occurred when Gamma Ten exchanged common stock from the treasury for property, plant, and equipment assets with a fair value of $1.7 million.

You have been assigned the task of drafting the statement of cash flows for 2022. Information has been provided to you about the following transactions.
Nationalization of foreign investments  In August of 2022, a mining operation in an overseas territory was nationalized by the local government.  Gamma Ten had insurance against such an event and recorded the following upon settlement of the
Cash 300,000,000
Accumulated depreciation 79,400,000
Unusual loss – forfeiture of foreign assets 137,400,000
Land 68,000,000
Buildings and equipment 97,400,000
Natural resources – mineral deposit 283,000,000
Inventory 68,400,000
The amount of the insurance settlement was determined as follows, based on the fair values of the assets
Land $ 10,000,000
Buildings and equipment 30,000,000
Natural resources 170,000,000
Inventory 90,000,000
Total $300,000,000
Joint Venture
On February 28, 2022, Gamma Ten made an investment in a shale oil joint venture. A 33.33% ownership stake in the joint venture was purchased for $8.8 million, and the investment was recorded as an equity method investment. The following was recorded at the time of the investment:
Equity method investment 8,800,000
Cash 8,800,000
For the year, the joint venture reported $3.3 million of net income and paid $4.5 million in dividends.  Since the joint venture has a single purpose to extract resources from a single natural resource deposit  (at the conclusion of which, the company will be liquidated), all dividends are treated as returns of investment (not returns on investment). Gamma Ten records the following for its ownership in the joint  venture for 2022:
Cash 1,500,000
Income from equity method investment 1,100,000
Equity method investment 400,000

Asset Retirement Obligation
Gamma Ten owned land with a book value of $2.7 million. On the land is a coal deposit, now fully
depleted, and Gamma Ten also had a properly recorded asset retirement obligation of $4 million
(included in “Other current liabilities” at the end of 2021) for the work required to restore the land after
the completion of mining.
In April 2022, GMI Environmental Solutions, Inc. was contracted to perform the cleanup work for $4
million. GMI agreed to accept in payment $2 million in cash and ownership of the land after the work
was completed. The following was recorded:
Asset retirement obligation 4,000,000
Loss on disposal of land 700,000
Land 2,700,000
Cash 2,000,000

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