A gain on the sale of long-term assets is added to net income to arrive at net cash flows from operating activities under the indirect method.
A gain on the sale of long-term assets is subtracted from net income to arrive at net cash flows from operating activities under the indirect method.

Question

Quizplus · Accepted Answer

A gain on the sale of long-term assets is a non-operating income and is therefore not included in the calculation of net cash flows from operating activities. Instead, it is reported separately in the investing activities section of the cash flow statement. To arrive at net cash flows from operating activities under the indirect method, non-operating items such as gains on the sale of long-term assets are subtracted from net income.

A Gain on the Sale of Long-Term Assets Is Added