Under the direct method of preparing a statement of cash flows, the gain on the sale of land is not adjusted or reported as part of cash flows from operating activities.

Direct Method

In cash flow reporting, this accounting method lists major cash inflows and outflows directly, showing the exact sources and uses of cash during the reporting period.

Gain on Sale

The financial benefit realized when selling an asset for more than its book value or cost basis.

Operating Activities

Activities directly related to the day-to-day operations of a business, including revenue and expense transactions affecting net income.