USA Statement of cash flows


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Hello, I'm currently working on statement of cash flows and have a question about line item of investing cash flow.
Do I record the gap of long term asset on balance sheets between the last fiscal year and this fiscal year on investing cash flow section? If I do that, I'm counting in depreciation which is a non-cash expense and I think it's wrong. Where should I get the number of gain/loss from long term asset which goes into the investing section on cash flow statement?
I know this is a fundamental question. I'm new to accounting(took some classes online) so your help will be really appreciated! Thank you.
 
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kirby

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No, you do not record the difference between long term assets as "Investing". Long term assets can include long term investments, fixed assets, deferred charges, etc. So it can be a mixed bag of stuff and not all may be from investing activity. You need to separately analyze each major balance sheet line item to see what changed and what classification it should go to . Yes - depreciation is a non cash expense and cannot be counted in the change of the fixed asset account. To get gain/loss look at the income statement as a start but remember you need to show the cash PROCEEDS and not just the pure gain loss. I suggest you buy an intermediate acctg textbook that has full examples of cash flow statement and read through that. Good luck.
 
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Thank you so much Kirby. It was really helpful. I think your advice to get and read through an intermediate accounting text book makes sense! Do you have any recommendation? I started reading a one written by Earl.K and James ("intermediate accounting 17th edition") and it is easy to understand but have a feeling that the contents might not be complete.
 

kirby

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Intermediate accounting by Kieso. The most current edition is very expensive but you don't need that for your purpose. So get an older less expensive edition
 
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Kirby, thank you for your recommendation! I've downloaded 13th edition of it and so far it's great.
 

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