The following information relating to Equipment was extracted from the records of Bright Skies Limited: Opening balance $360 000
Proceeds from sale of equipment $6000
Closing balance $400 000
Cost of equipment sold $40 000
Cost of new equipment $80 000
Carrying amount of equipment sold $ 10 000
The total cash flows from these investing activities is determined as:
A) $40,000 cash outflow.
B) $74,000 cash outflow.
C) $76,000 cash outflow.
D) $80,000 cash outflow.

Question

Quizplus · Accepted Answer

The total cash flows from investing activities include cash outflows for purchasing new equipment and cash inflows from selling old equipment. The purchase of new equipment represents a cash outflow of $80,000. The sale of old equipment represents a cash inflow of $6,000. Therefore, the net cash flow from these investing activities is $80,000 (outflow) - $6,000 (inflow) = $74,000 cash outflow.

The Following Information Relating to Equipment Was Extracted from the Records