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How would Cockle Bay Marine Pty Ltd report

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Question - Cockle Bay Marine Pty Ltd charters (rents) boats and yachts to qualified sailors. The company paid $8,000 on 9 May 2021 to Point Nepean Shipwrights for work done on Cockle Bay Marine Pty Ltd Yacht, Island Dreaming. The work consisted of purchasing and installing new sails at a cost of $7,000 and cleaning the hull (bottom of the yacht) which is done each year at a cost of $1,000. Disregard GST.

How would Cockle Bay Marine Pty Ltd report the $8,000 paid on 9 May 2021 in the financial statements?

Cash Flow Statement: Investing activity $7,000 outflow & Operating activity $1,000 outflow; Income Statement: maintenance expense hull cleaning $1,000 and Balance Sheet: Non-current asset Yacht new sails $7,000.

Cash Flow Statement: Operating activity outflow $8,000; Balance Sheet: Current asset hull cleaning $1,000 and Balance Sheet: Non-current asset Yacht new sails $7,000.

Cash Flow Statement: Operating activity inflow $8,000; Income Statement: maintenance expense hull cleaning $1,000 and Balance Sheet: Non-current asset Yacht new sails $7,000.

Cash Flow Statement: Investing activity outflow $8,000; Income Statement: maintenance revenue hull cleaning $1,000 and Balance Sheet: Non-current asset Yacht new sails $7,000.

Reference no: EM133000440

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