In a statement of cash flows, if equipment is sold at a gain, the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment
A) with no addition or subtraction.
B) plus the gain and less the amount of tax attributable to the gain.
C) plus both the gain and the amount of tax attributable to the gain.
D) plus the gain only.

Question

Quizplus · Accepted Answer

When equipment is sold at a gain, the amount shown as a cash inflow from investing activities in the statement of cash flows equals the proceeds received from the sale (which includes the gain) and not the carrying amount of the equipment. Therefore, the correct option is D, which states that the amount shown equals the gain only.

In a Statement of Cash Flows, If Equipment Is Sold