Almondine Company sold a computer for $50,000.The computer's original cost was $250,000,and the accumulated depreciation at the date of sale was $180,000.The sale of the computer should appear on Almondine's annual statement of cash flows (indirect method)as
A) a reduction in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $50,000.
B) an increase in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $50,000.
C) a reduction in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $70,000.
D) an increase in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $70,000.

Question

Quizplus · Accepted Answer

The gain on the sale of the computer is $20,000 (Sale price of $50,000 - Book value of $30,000, where Book value = Original cost of $250,000 - Accumulated depreciation of $220,000). This gain is added back to net income in the operating activities section. The cash received from the sale, $50,000, is reported in the investing activities section.

Almondine Company Sold a Computer for $50,000