hard · Financial Accounting liabilities-bonds-payable
A firm sells a building with a carrying value of $400,000 for $500,000 cash and immediately leases it back for 15 years. The transaction meets the 'sale' criteria under ASC 606.
How should this transaction be recorded on the Statement of Cash Flows?
- $500,000 cash inflow shown in Financing; no impact on Operating or Investing.
- Add back the $100,000 gain in Operating; report a $400,000 inflow in Investing.
- Report $400,000 inflow in Investing and a separate $100,000 inflow in Operating from the sale.
- Add back $100,000 gain in Operating (non-cash deduction); $500,000 inflow in Investing.
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