| Course | ACC 610 Financial Reporting I |
|---|---|
| Module | Module 9 |
| Paper type | graduate milestone on the statement of cash flows and disclosures |
| Length | About 1,080 words, 6 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | MS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 610 Module 9
Statement of Cash Flows and Key Disclosures for 2025
[Student Name]
Southern New Hampshire University
ACC 610: Financial Reporting I
Milestone Three
[Instructor Name]
[Date]
The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.
Statement of Cash Flows and Key Disclosures for 2025
Introduction
Earlier milestones settled how the company recognizes revenue from its cooperative contract and tests its service center and sensor goodwill for impairment. This milestone completes the 2025 financial statements by preparing the statement of cash flows under ASC 230 and drafting three notes the audit committee asked for. The cash flow statement matters more than usual this year, because the company reported a net loss while its cash and investments funded a second assembly line, and lenders and investors will read the two together (Kieso et al., 2019).
Operating Activities
The indirect method starts with the net loss and adjusts for items that affected income but not cash and for changes in working capital.
Cash flows from operating activities, 2025
| Item | Amount |
|---|---|
| Net loss | $(3,960,000) |
| Depreciation | 1,840,000 |
| Amortization of software and intangibles | 620,000 |
| Impairment of service center | 1,300,000 |
| Goodwill impairment, sensor unit | 2,600,000 |
| Loss on remeasurement of earnout | 1,710,000 |
| Credit loss expense on debt securities | 72,000 |
| Gain on equity securities | (420,000) |
| Stock-based compensation | 950,000 |
| Increase in accounts receivable | (1,480,000) |
| Increase in inventory | (2,350,000) |
| Increase in contract liabilities | 1,120,000 |
| Increase in accounts payable | 690,000 |
| Increase in prepaid expenses and other assets | (610,000) |
| Increase in accrued liabilities | 380,000 |
| Operating cash flow, total | $2,462,000 |
Every adjustment has a reason. The two impairments, $3.9 million combined, are the largest; the cash for those assets left the company when they were built or acquired and was reported as investing then. The earnout liability rose from $1.26 million to $2.97 million when sensor revenue passed the $4 million target in November, and the $1.71 million charge will not use cash until March 2026. The equity security gain is subtracted because it raised income with no cash received. Contract liabilities grew because cooperatives prepaid subscriptions, which is why operating cash looks stronger than the loss suggests. The $610,000 increase in other assets includes the cloud ERP implementation asset, whose payments are operating cash flows under ASU 2018-15 even though they were capitalized.
Investing and Financing Activities
Cash flows from investing and financing activities, 2025
| Item | Amount |
|---|---|
| Purchases of property and equipment | $(9,800,000) |
| Capitalized software development | (2,580,000) |
| Purchases of debt securities | (46,000,000) |
| Maturities of debt securities | 13,000,000 |
| Purchases of equity securities | (3,380,000) |
| Net cash used in investing activities | $(48,760,000) |
| Proceeds from equipment loan | 6,000,000 |
| Repayments of equipment loan | (750,000) |
| Proceeds from stock option exercises | 210,000 |
| Net cash provided by financing activities | $5,460,000 |
| Net decrease in cash and cash equivalents | $(40,838,000) |
| Cash and cash equivalents, beginning of year | 52,400,000 |
| Cash and cash equivalents, end of year | $11,562,000 |
The capitalized firmware and platform costs, $380,000 and $2.2 million, are investing outflows because they create long-lived assets; the amounts expensed in the same projects are operating. The bond purchases are reported gross, separately from maturities, as ASC 230-10-45-7 requires for most investments. The Treasury bills are not cash equivalents because they had more than 90 days to maturity when bought. The large decrease in cash is mostly a shift into securities, not a loss of resources: cash and investments together fell from about $52.4 million to about $48.1 million.
The 2026 Earnout Payment
The company will pay the sensor company's former owners $3 million in March 2026. ASU 2016-15 settled how such payments are classified when they are not made soon after the acquisition (Financial Accounting Standards Board, 2016). The portion up to the liability recognized at the acquisition date, $1.1 million, is a financing outflow, because the company in effect financed part of the purchase; the remaining $1.9 million, which reflects remeasurements charged to earnings, is an operating outflow. The note on contingent consideration should explain this split, since it will reduce 2026 operating cash flow.
Supplemental and Noncash Disclosures
Interest paid was $210,000 and income taxes paid were $15,000 of state minimum taxes. Equipment of $420,000 was acquired on account and unpaid at year end, a noncash investing activity disclosed separately and excluded from the purchases line.
Reading the Statement
Three points stand out for readers. First, operating cash flow was positive for the first time, helped by $1.12 million of customer prepayments; if cooperatives move to monthly billing, that support disappears, so the trend should be watched rather than assumed. Second, inventory grew $2.35 million, faster than revenue, because the company built drones ahead of the spring season and stocked parts for the second line. That build should reverse by June, and the note on inventory should explain it. Third, investing outflows were almost twenty times operating inflows. Most of that was the placement of Series B funds into securities, but the $9.8 million for the second assembly line and the $2.58 million of capitalized software are commitments the company will repeat in 2026, which makes the liquidity evaluation below more than a formality. Presenting free cash flow is not required by GAAP, and if the company shows it in investor materials it should define it and reconcile it to operating cash flow.
Going Concern Evaluation
ASC 205-40 asks management to look one year past the issue date and judge whether the company can pay what it owes as it comes due. The company has a history of losses, but at December 31 it held $11.6 million of cash and $36.5 million of securities, against a 2026 budget calling for a net cash outflow of about $14 million, including the earnout. Management concluded that no substantial doubt exists. The note should state the evaluation and the key assumptions, and the auditor will test the budget's sensitivity to a weaker spraying season.
Concentrations and Subsequent Events
Two farm cooperatives accounted for 23 percent of 2025 revenue and 31 percent of year-end receivables, which ASC 275 requires the company to disclose as a concentration that makes it vulnerable to a near-term severe impact. After year end, in February 2026, the competitor that bundles a free camera announced a price cut on its spraying drones. This is a nonrecognized subsequent event, since the conditions arose after the balance sheet date, but its nature and an estimate of its effect, or a statement that one cannot be made, should be disclosed.
Conclusion
Dechow (1994) showed that accrual earnings usually measure performance better than cash flows, but that cash flows add information when accruals are large, as they are this year. The company's statements tell a consistent story once the impairments, the earnout and the shift into securities are explained: the core business generated cash, while the reported loss came largely from noncash charges and the competitive threat to the sensor unit.
References
Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3-42. https://doi.org/10.1016/0165-4101(94)90016-7
Financial Accounting Standards Board. (2016). Statement of cash flows (Topic 230): Classification of certain cash receipts and cash payments (Accounting Standards Update No. 2016-15). Author.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (17th ed.). Wiley.
What the ACC 610 Module 9 instructions ask for
The third ACC 610 milestone usually asks you to prepare or evaluate a case company's statement of cash flows and the disclosures that accompany the financial statements. Plan to apply ASC 230: classify cash flows as operating, investing or financing, reconcile net income to operating cash flow under the indirect method and report noncash activities. Many versions build on earlier milestones, so the revenue, impairment and investment conclusions should flow through. Expect also to draft key notes, such as significant accounting policies, going concern evaluation, concentrations and subsequent events. Explain classification judgments with Codification references, since graders focus on those more than on the addition, and show that the statement ties to the change in cash.
How this ACC 610 Module 9 milestone three example is built
The milestone starts from a $3.96 million net loss and adds back noncash charges: depreciation and amortization of $2.46 million, impairments of $3.9 million, a $1.71 million earnout remeasurement and $950,000 of stock compensation, less a $420,000 equity security gain. Working capital uses $2.25 million, leaving operating cash flow of $2.46 million. Investing uses $48.76 million, mostly a $33 million bond portfolio and a second assembly line. Financing provides $5.46 million from an equipment loan. The paper explains why the 2026 earnout payment will be split between financing and operating cash flows and drafts going concern, concentration and subsequent event notes. It closes by reading the loss and the cash flow together.
Where the ACC 610 Module 9 rubric puts the points
Rubrics for the third ACC 610 milestone typically score the accuracy and classification of cash flows, the reconciliation of net income to operating cash flow, noncash disclosures, the quality of the required notes, consistency with earlier milestones and Codification support. Top papers explain why each noncash item is added back, classify unusual items such as capitalized software and contingent consideration payments correctly and tie the statement to the change in cash. Graders also reward notes written for the specific company rather than generic boilerplate, and supplemental disclosures for interest, taxes and noncash activity. Common deductions include adding back gains, treating investment purchases as operating, omitting the going concern evaluation and ignoring the earlier milestones' results.
ACC 610 Module 9 help: the mistakes that cost points
Milestone Three papers most often slip on signs in the indirect method, adding back a gain or subtracting an increase in a liability. A second weak spot is classification of the less common items: capitalized software development is investing, cloud implementation payments are operating, and contingent consideration payments are split by the acquisition-date amount. If your case uses the direct method, the same classifications apply and a reconciliation is still required. Prove the statement before writing about it by checking that the net change in cash equals the change on the balance sheet; an error there signals a classification or sign problem that will cost more points than any note.
Get ACC 610 Module 9 written to your instructions
Send the ACC 610 Milestone Three guidelines and the case financials. The milestone will build the statement of cash flows, explain each reconciling item and classification with Codification support and draft the notes the guidelines require. The first is free; plan on about two days. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 610 Module 9 questions, answered
Where can I find a free ACC 610 Module 9 Milestone Three sample?
This page includes a full ACC 610 Milestone Three preparing a drone maker's cash flow statement and key disclosures.
Why are impairment losses added back in the indirect method?
Because they reduce net income without using cash; the cash was spent when the asset was acquired and reported then as an investing outflow.
How are capitalized software costs classified in the cash flow statement?
Costs capitalized as internal-use or to-be-sold software are investing outflows; amounts expensed as incurred are operating outflows.
How is a contingent consideration payment classified?
Under ASU 2016-15, payments made soon after an acquisition are investing; later payments up to the acquisition-date liability are financing and any excess is operating.
When must a company disclose substantial doubt about going concern?
When conditions raise substantial doubt about its ability to meet obligations within one year after the statements are issued, management must evaluate its plans and disclose the conditions and plans.