Lesson: Investing Activities

In this lesson, Nick Palazzolo, CPA, demystifies the inflows and outflows of cash related to investing activities, which often appear on multiple-choice questions. He breaks down the essentials: purchasing and selling non-current assets, including investments in debt or equity of other companies, as well as handling physical assets like machinery or equipment. Nick clarifies the difference between trading securities for operations versus long-term investment purposes, explaining how each impacts the cash flow statement differently. He also delves into the accounting entries for acquiring or disposing of assets, addressing how gains, losses, depreciation, and amortization factor into these transactions. Additionally, Nick provides insight into accounting for the acquisition of a subsidiary and the nuances of presenting the payment for it on the cash flow statement.