Jump to content


Photo
- - - - -

gain on sale of trading securities on cash flow statement


  • Please log in to reply
1 reply to this topic

#1 riperry

riperry

    Newbie

  • CPAnet Member
  • Pip
  • 1 posts

Posted 03 April 2014 - 03:46 PM

This is a question from becker. I am so confused.

it is said the company classifies the proceeds from the sale of trading securities as an operating cash outflow(? is there mistake with the question, isn't it an inflow), how to deal with gain on sale on trading securities under indirect method?

 

In the answer, Becker deduct the gain from the net income. But I don't think so, since sale of trading is considered an operating activities, so we don't need to deal with the gain from the net income. Only when the gain comes from the investing activities, we shall deduct gain from NI. Am I right?

 



#2 ingiukas

ingiukas

    Newbie

  • CPAnet Member
  • Pip
  • 1 posts

Posted 06 April 2014 - 11:34 AM

I think where you are getting the confusion is the proceeds from the sale of trading securities vs gains. Gains are booked with the value fluctuation but they are not actual cash inflows. Gains are always outflows, thats why they get subtracted from NI.