A company uses the indirect method to prepare the statement of cash flows. It sold a piece of land at a gain of $3,600. The equipment was purchased several years ago for $70,500 and had accumulated depreciation of $52,900. What is reported under the operating activities section on the statement of cash flows?

Question

Quizplus · Accepted Answer

Under the indirect method, the gain on the sale of the land is added back to net income to adjust for non-cash transactions. Therefore, the gain of $3,600 is subtracted from net income in the operating activities section. The cash proceeds from the sale are already reflected in the investing activities section.

A Company Uses the Indirect Method to Prepare the Statement