Wize University Introduction to Financial Accounting Textbook > The Cash Flow Statement
Investing Activities Section
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Investing Activities
The investing activities section lists all the cash transactions related to the purchase or sale of long-term assets.
Carrying Value vs Sale Price vs Cash Proceeds
- Carrying value is the book value of the asset after depreciation
- For assets that do not depreciate, carrying value is equal to original cost
- Sale price is the amount the asset is sold for.
- Carrying value + Gain on sale
- Carrying value - Loss on sale
- Cash proceeds is the actual cash inflow from the sale only this ends up on the cash flow statement
Wize Tip
When preparing the investing activities section, use T-accounts to determine the carrying values of the assets purchased and sold.
Purchases
- Only cash outflows from purchases appear on the cash flow statement.
- If the method of payment is not specified, assume cash.
Watch Out!
Sometimes sales or purchases of assets are not explicitly mentioned in the information and must be found by balancing the T-account.
What it looks like
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Example: Investing Activities
The following financial statements are available for Wizedemy Inc. for the years ended June 30th, 2024 and 2025.
Additional Information
- During 2025, the company sold old equipment with an original cost of $6,000 and accumulated depreciation of $4,200.
- During 2025, the company sold one of its long-term investments that had originally cost $1,500.
Prepare in proper form the investing activities section of the statement of cash flows.
Mark Yourself Question
- Grab a piece of paper and try this problem yourself.
- When you're done, check the "I have answered this question" box below.
- View the solution and report whether you got it right or wrong.
Practice: Investing Activities
The following financial statements are available for KG Corp. for the year ended December 31st, 2020:
Additional Information
- Purchased new equipment for $700,000, paying 80% in cash and issuing common shares for the balance.
- Sold equipment for cash.
- Sold long-term investments for $48,000 in cash.
Prepare in proper form the investing activities section of the statement of cash flows.