Kingston Jerk Factory reported the following results for 2017: $\begin{array}{lll}&\text { December } 31&\text { January } 1\
\text { Property, plant, and equipment } & \$ 420,000 & \$ 405,000 \
\text { Accumulated depreciation } &{(189,000)} & ( 180,000) \
\text { Net property, plant, and equipment } &{\$ 231,000}& \$ 225,000
\end{array}$ During 2017, the company sold equipment that had an original cost of $39,000 and accumulated depreciation of $31,000 for $13,000.New equipment was purchased for cash during the year.How much gain/(loss) will Kingston add or subtract from net income when preparing the operating activities section of the statement of cash flows using the indirect method for 2017?

Question

Kingston Jerk Factory reported the following results for 2017: $\begin{array}{lll}&\text { December } 31&\text { January } 1\
\text { Property, plant, and equipment } & \$ 420,000 & \$ 405,000 \
\text { Accumulated depreciation } &{(189,000)} & (  180,000) \
\text { Net property, plant, and equipment } &{\$ 231,000}& \$ 225,000
\end{array}$ During 2017, the company sold equipment that had an original cost of $39,000 and accumulated depreciation of $31,000 for $13,000.New equipment was purchased for cash during the year.How much gain/(loss) will Kingston add or subtract from net income when preparing the operating activities section of the statement of cash flows using the indirect method for 2017?

Quizplus · Accepted Answer

The gain on the sale of equipment is calculated as the sale price ($13,000) minus the book value of the equipment sold ($39,000 - $31,000 = $8,000), resulting in a gain of $5,000. This gain is subtracted from net income in the operating activities section of the cash flow statement using the indirect method.

Kingston Jerk Factory Reported the Following Results for 2017 During 2017, the Company Sold Equipment That Had an Original