Gains and losses on the sale of plant, property, and equipment are ignored in the direct method of preparing a cash flow statement.

Question

Quizplus · Accepted Answer

The direct method of preparing a cash flow statement only focuses on cash inflows and outflows related to operating activities. Gains and losses on the sale of plant, property, and equipment are considered investing activities and are not included in the direct method. They are instead reported in the investing section of the cash flow statement using the indirect method.

Gains and Losses on the Sale of Plant, Property, and Equipment