1. Insurance Settlement Proceeds 230-10-45-12 states that receipts from disposing of loans, debt or equity instruments, or property, plant, and equipment include directly related to proceeds of insurance settlements, such as the proceeds of insurance on a building that is damaged or destroyed should be treated as cash inflows from investing activities. Hence, according to 230-10-45-12, the insurance proceeds of $20 million from its insurance carrier in connection with its claim for reimbursement for the destroyed building should be classified as investing cash inflow. Moreover, cash receipt is not presented in the cash flow statement based on its intended use. Thus, these proceeds could be utilized for any purpose and will be presented accordingly in the cash flow statement. As given in the question, when the proceeds are used to fund its defined-benefit pension plan it will be classified as an operating cash outflow at the time. Alternative 1 The insurance settlement proceeds should be classified as an investing cash inflow in the statement of cash flows is the correct alternative.

2. Acquisition of Property, Plant, and Equipment on Account 230-10-45-14 through 45-15 states that payments at the time of purchase or soon before or after purchase to acquire property, plant, and equipment and other productive assets, including interest capitalized as part of the cost of those assets. Generally, only advance payments, the down payment, or other amounts paid at the time of purchase or soon before or after purchase of property, plant, and equipment and other productive assets are investing cash outflows. However, incurring directly related debt to the seller is a financing transaction, and subsequent payments of principal on that debt thus are financing cash outflows. Thus the code clearly states that only payment towards acquisition of property, plant, and