Suzanne Inc.'s policy is to report all cash flows arising from interest and dividends in the operating activities section.The activities for the year ended December 31,2018 included the following: • Interest revenue for the period was $12,000.The interest receivable account decreased $3,000.
• Sold an available-for-sale investment for $10,000.The book value was $5,000.
Using the indirect method,how much would be presented as cash flow from operating activities?
A) Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 12,000.
B) Proceeds from disposal in the amount of 10,000 + Interest received in the amount of 15,000.
C) Gain on sale in the amount 5,000 + Interest received in the amount of 12,000.
D) Adjustment to Net Income of -5,000 for gain on sale + Interest cash flow of +15,000.

Question

Quizplus · Accepted Answer

The gain on sale of $5,000 is deducted from net income, and the interest cash flow is $15,000 ($12,000 interest revenue + $3,000 decrease in interest receivable).