18 - • Refers to how operating section is prepared...

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Computing Issuance of Stock and Purchases of Treasury Stock Common stock, beginning balance + Issuance of new stock = Common stock, ending balance Treasury stock, beginning balance + Purchase of treasury stock = Treasury stock, ending balance Noncash Investing and Financing Activities Transactions that involve long-term assets, long-term debt and/or equity But do not increase or decrease cash Examples: Purchasing plant assets by signing a note payable Issuing stock for land Stock dividends Direct Method FASB prefers as it provides clearer information Rarely used as it requires more calculations
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Unformatted text preview: • Refers to how operating section is prepared Investing and Financing activities always prepared using the direct method • Goal: Convert each income statement item into a cash amount Or exclude if a noncash item Direct Method • Noncash expenses not listed Depreciation, depletion and amortization • Gains and losses not included Gain or loss does not equal cash received Cash proceeds included as an investing inflow • Investing and financing activities reported as explained previously...
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