Valdez Company sold land that had cost $48,000 for $60,000 cash.Which of the following statements is true about this transaction?

Question

Quizplus · Accepted Answer

According to Generally Accepted Accounting Principles (GAAP), gains or losses from the sale of long-term assets (such as land) are reported in the operating activities section of the statement of cash flows using the indirect method. Thus, the $12,000 gain would be subtracted from net income in the operating activities section prepared using the indirect method. Additionally, the sale of land for cash would be reported as a cash inflow from investing activities, and therefore $60,000 would be reported as a cash inflow from investing activities in the statement of cash flows. Choice D accurately reflects both of these components.

Valdez Company Sold Land That Had Cost $48,000 for $60,000