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

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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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