Under the direct method, a gain on the sale of equipment is included in net income and subtracted in the operating activities section of the statement of cash flows because it is not a cash flow.

Question

Quizplus · Accepted Answer

Under the direct method, a gain on the sale of equipment is included in the investing activities section of the statement of cash flows, not the operating activities section. This is because it relates to a transaction involving a long-term asset, which is classified as an investing activity.

Under the Direct Method, a Gain on the Sale of Equipment