How do the sale of its Craftsman brand, a loan from a hedge fund, and the sale of real estate impact Sears’ statement of cash flows?

Photo of a Sears storeIn January 2017, Sears Holding Corporation (NASDAQ: SHLD) sold its Craftsman brand for $900 million to Black & Decker, the manufacturer of power tools and accessories. That same month, a hedge fund affiliated with the CEO of Sears loaned Sears $500 million. Sears also has plans to sell about $1 billion of real estate assets in 2017.

Questions

  1. What category of activity on the statement of cash flows would the sale of the Craftsman brand be considered?
  2. What category of activity on the statement of cash flows would the loan from the hedge fund be considered?
  3. What category of activity on the statement of cash flows would the sale of Sears real estate holdings be considered?
  4. How would Sears’ statement of cash flows be impacted by these activities? (Ignore any gains or losses on the transactions to answer this question.)

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

2 Responses to “How do the sale of its Craftsman brand, a loan from a hedge fund, and the sale of real estate impact Sears’ statement of cash flows?”

  1. Dear Dr. Wendy , its v. useful question and important , can you pls. guide me where I can find reply of above questions.

    • Dr. Wendy Tietz, CPA, CMA, CGMA Reply March 27, 2017 at 6:28 am

      Thank you for the feedback. I do not publish answers or solutions for the blog post questions for two reasons. First of all, in many cases there is no one right answer and the questions are meant to spark discussion and critical thinking. Secondly, since some professors assign blog posts as a graded assignment, I don’t want to publish answers that are able to retrieved via a search – I have no way to control that only instructors would have access. Have a nice day!

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