Hager Company sold some of its plant assets during 2015. The original cost of the plant assets was $750,000 and the accumulated depreciation at date of sale was $700,000. The proceeds from the sale of the plant assets were $75,000. The information concerning the sale of the plant assets should be shown on Hager's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

Question

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The sale of plant assets represents a loss on disposal of $25,000 ($750,000 - $700,000 - $75,000 = $25,000). This loss should be added back to net income on the statement of cash flows. Since the sale of plant assets is an investing activity, the $75,000 proceeds from the sale should be shown as an increase in cash flows from investing activities. Therefore, the answer is choice C.

Hager Company Sold Some of Its Plant Assets During 2015