Equipment which cost $213,000 and had accumulated depreciation of $114,000 was sold for $111,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n)

Question

Quizplus · Accepted Answer

The sale of equipment is a cash inflow from investing activities because it involves the disposal of a long-term asset. The amount that should be deducted from net income is the difference between the selling price and the book value of the equipment, which is $102,000 ($213,000 cost minus $114,000 accumulated depreciation minus $111,000 selling price). Therefore, the correct option is C, deduction from net income of $12,000 and a $111,000 cash inflow from investing activities.

Equipment Which Cost $213,000 and Had Accumulated Depreciation of $114,000