Free Cash Flow

Sebel Corporation had cash flows from operating activities during the past year of $194,000. During the year, the company expended $25,000 for dividends; expended $158,000 for property, plant, and equipment; and sold property, plant, and equipment for $12,000. Calculate the company’s free cash flow. What does the result tell you about the company?

Determining Cost of Long-Term Assets

Watts Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to (a) Land, (b) Land Improvements, or (c) Buildings.

1. Paving costs 5. Building construction costs

2. Architects’ fee for building design 6. Lights around the property

3. Cost of clearing the property 7. Building permit

4. Cost of the property 8. Interest on the construction loan