Page 658 - Accounting Principles (A Business Perspective)

16. Analysis using the statement of cash flows

Accrued liabilities payable 2,000 8,250
Long-term note payable 150,000 150,000
Common stock ($5 par) 185,000 165,000
Paid-in capital in excess of par 32,500 -0-
Retained earnings 91,500 87,450
Total liabilities and stockholders' equity $510,330 $489,000
Land was bought for USD 37,500 cash. The company intends to build a building on the land. Currently the
company leases a building for its operations.
Equipment costing USD 50,000 with accumulated depreciation of USD 30,000 was sold for USD 23,500 (a gain

of USD 3,500), and equipment costing USD 20,000 was purchased for cash.
Depreciation expense for the year was USD 37,500.
Common stock was issued for USD 52,500 cash.
Dividends declared and paid in 2011 totaled USD 32,950.
Net income was USD 37,000.
The company paid interest of USD 3,000 and income taxes of USD 17,000.
Prepare a statement of cash flows under the indirect method. Also prepare any necessary supplemental

schedule(s).
Problem C Computer Associates International, Inc., is leading business software company. The company was
founded in 1977 with four employees and has grown to 18,200 employees and about 4.2 billion in revenues.
The company's statements of cash flows for the years 2002 through 2004 follow. Then the relevant portion of
Management's Discussion and Analysis of the statement of cash flows is provided.
Consolidated statements of cash flows
Year Ended March 31
Operating activities: 2004 2003 2002
(In
millions)
Net (loss) income $ (591) $ 696 $ 626
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization 1,110 594 325
Provision for deferred income taxes (benefit) (350) 412 107
Charge for purchased research and development--- 795 ---
Compensation (gain) expense related to stock (146) 30 778
pension plants
Decrease (increase) in noncurrent installment 956 (1,039) (422)
accounts receivable, net
Decrease (increase) in deferred maintenance (3) 113 43
revenue
Foreign currency transaction loss – before taxes 14 5 11
Charge for investment write-off --- 50 ---
Gain on sale of property and equipment --- (5) (14)
Changes in other operating assets and liabilities,
net of effects of acquisitions:
Decrease (increase) in trade and installment 418 83 (169)
receivables
Other changes in operating assets and (25) (168) (18)
liabilities
Net cash provided by operating activities $ 1,383 $ 1,566 $ 1,267
Investing activities:
Acquisitions, primarily purchased software,
marketing rights and intangibles, net of cash $ (174) $ (3,049) $ (610)
acquired
Settlements of purchases accounting liabilities (367) (429) (57)
Purchases of property and equipment (89) (198) (222)
Proceeds from sale of property and equipment 5 12 38
Disposition of businesses 158 --- ---
Purchases of marketable securities (48) (95) (2,703)
Sales of marketable securities 40 189 2,639

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