1. · 1 CORPORATE FINANCIAL REPORTING Cash Flow Statement Long-Lived Assets

2. C ASH F LOW S TATEMENT Operating activitiesxxxx Investing activitiesxxxx Financing activitiesxxxx Increase (decrease) in cashxxxx Cash, beginning of the year xxx Cash, end of the yearxxxx 2Cash Flow Statement

3. C ASH F LOW S TATEMENT Operating activities normal day-to-day income producing activities (including buying/selling Trading Securities) Investing activities acquiring/disposing of non-current assets (including buying/selling Securities Available For Sale) lending and being repaid the principle Financing activities borrowing and repaying the principle amount borrowed all cash transactions with shareholders 3Cash Flow Statement

4. C ASH F LOW S TATEMENT Companies don’t really prepare cash flow statements like we did the first day of class. They use, as much as possible, a logic based approach. 4Cash Flow Statement

5. C ASH F LOW S TATEMENT Suppose you saw the following under ASSET on a company’s balance sheet: (in $ 000) 2010 2009 Land 10,000 4,000 and under LIABILITIES there were no liabilities for a land purchase. What would you surmise happened? 5Cash Flow Statement

6. C ASH F LOW S TATEMENT Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000) 2010 2009 Land 10,000 4,000 and under LIABILITIES there was: 2010 2009 Mortgage payable for land 5,000 -0- What would you surmise happened? 6Cash Flow Statement

7. C ASH F LOW S TATEMENT Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000) 2010 2009 Land 10,000 24,000 and there is no loss from land impairment on the 2020 income statement. What would you surmise happened? 7Cash Flow Statement

8. C ASH F LOW S TATEMENT Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000) 2010 2009 Land 10,000 24,000 Nothing about a receivable from sale of land. And on the 2010 income statement you saw Gain on land sale 5,000 - What would you surmise happened? 8Cash Flow Statement

9. C ASH F LOW S TATEMENT Suppose you saw the following under ASSETS on a company’s balance sheet: (in $ 000) 2010 2009 Land 10,000 24,000 And on the 2010 income statement you saw Impairment of land (14,000) - What would you surmise happened? 9Cash Flow Statement

10. C ASH F LOW S TATEMENT Suppose you saw the following under OWNERS’ EQUITY on a company’s balance sheet: (in $ 000) 2010 2009 Capital stock 10,000 7,000 Paid in surplus 14,000 9,000 What would you surmise happened? 10Cash Flow Statement

11. C ASH F LOW S TATEMENT For the most part, that is the approach companies take to prepare cash flow statements. 11Cash Flow Statement

12. C ASH F LOW S TATEMENT Warning! Accounting professors love to put cash flow statement problems on tests. 12Cash Flow Statement

13. C ASH F LOW S TATEMENT QUESTIONS? 13Cash Flow Statement