To compute the cash flows from investing activities under Generally Accepted Accounting Principles (GAAP), we need to consider transactions related to the purchase and sale of long-term assets and investments. Let's go step-by-step through the information provided:
1. Identify Relevant Transactions for Investing Activities:
- Cash collections from customers: This is an operating activity, not an investing activity.
- Purchase of used equipment: This is an investing activity, as it involves the acquisition of a long-term asset.
- Depreciation expense: This is a non-cash operating activity, not relevant to cash flows from investing activities.
- Sale of investments: This is an investing activity, as it involves the sale of a long-term asset.
- Dividends received: Typically considered as an operating activity under GAAP.
- Interest received: Typically considered as an operating activity under GAAP.
2. Calculate Net Cash Flows from Investing Activities:
- Outflows:
- Purchase of used equipment: [tex]$200
- Inflows:
- Sale of investments: $[/tex]450
The net cash flow from investing activities is calculated by subtracting the total cash outflows from the total cash inflows derived from investing activities.
[tex]\[
\text{Net Cash Flows from Investing Activities} = \text{Cash Inflows} - \text{Cash Outflows}
\][/tex]
Substitute the given amounts:
[tex]\[
\text{Net Cash Flows from Investing Activities} = \$450 - \$200 = \$250
\][/tex]
3. Conclusion:
The cash flows from investing activities under GAAP amount to $250.
