The income statement for the year ended December 31, 2014, for Laskowski Manufacturing Company contains the following
Question:
Included in operating expenses is a $24,000 loss resulting from the sale of machinery for $270,000 cash. The company purchased machinery at a cost of $750,000.
Laskowski reports the following balances on its comparative balance sheets at December 31.
Income tax expense of $353,000 represents the amount paid in 2014. Dividends declared and paid in 2014 totaled $200,000.
Accounting
Prepare the statement of cash flows using the indirect method.
Analysis
Laskowski has an aggressive growth plan, which will require significant investments in plant and equipment over the next several years. Preliminary plans call for an investment of over $500,000 in the next year. Compute Laskowski's free cash flow (from Chapter 5) and use it to evaluate the investment plans with the use of only internally generated funds.
Principles
How does the statement of cash flows contribute to achieving the objective of financial reporting?
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
Step by Step Answer:
Intermediate Accounting 2014 FASB Update
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield