Because the cash received from the sale of long-term assets is reported in the investing activities section of the statement of cash flows, any gain or loss is built into the cash received under the direct method.

Question

Quizplus · Accepted Answer

The direct method of preparing the statement of cash flows reports the actual cash inflows and outflows during the period. Therefore, any gain or loss on the sale of long-term assets would already be included in the cash received from the sale and reported in the investing activities section. Hence, the first statement is true.

Because the Cash Received from the Sale of Long-Term Assets