CFI or CFO

CFI.

Initially it is reported as "gain from sale of assets" in income statement. When calculating CFO, the amount of gain is deducted. CFI is calculated as the difference of gross amounts of PP&E...roughly speaking
 
That's what I thought. Thanks.

Do you have Schweser Pro Q bank. If so, look at question #2333. In the answer they classify the profit on sale of equiptment as CFO.
 
no, Philly 1616, I don't have Schweser Q bank...if you have time and desire to type the questions....could you, please, type the question (and another one you mentioned in another post) and we will crack these questions together. Thanks
 
ok. This question gives you a Balance sheet and an Income statement, too long to write. But for shorter questions I'll post/write the whole question online.
I think they classify the gain as a CFO because they were using the indirect method so it needs to be substracted out of Net Income, but in reality it's not a CFO but a CFI.
 
This is confusing, because the gain would not be reported as CFI, as CFA Montreal stated is would be reflected on the Income statement, however the "proceeds" from the sale of the equipment would be an inflow to CFI, and the gain " a non-cash item" would be added back in calculating the CFO using the indirect method. Is this correct? So technically it would be used to calculate CFO. Right?
 
correction, subtract the gain in calc of CFO using indirect method...sorry
 
When including sale of equipment in CFI, to avoid double counting, you must subtract the gain (or add the loss) into indirect method when calculating CFO.
 
TIP: Understand Cashflows flat, CFA L2, has 250 pages on cashflow analysis.
 
Jamespucyk, may you, please, describe in a few words holy cashflows for CFA Level 2? Thanks
 
Yes, in the indirect method you would substract the gain from Net Income ( to avoid double counting) to get CFO, but it's not part of CFO... it's CFI
 
jamespucyk, don't bother yourself with my previous question. I looked at Outlines for Level II. It is 8 chapters. Thanks for advice. Actually, when I am studying for Level I, I keep in mind the Outlines for Level II. Level II will start for me after December exam as well ;)
 
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