A company sold equipment with a book value of $10,000 at a gain of $2,500.How much can be reported in the investing activities section of the statement of cash flows as cash received upon the sale of the equipment?

Question

Quizplus · Accepted Answer

The gain of $2,500 represents the amount by which the sale price exceeded the book value. Therefore, the sale price must have been $12,500 ($10,000 + $2,500). This $12,500 should be reported as cash received in the investing activities section of the statement of cash flows.

A Company Sold Equipment with a Book Value of $10,000