Metalcrafts Inc During Year 2, the Company Sold Equipment with a Cost

Metalcrafts Inc.Selected information from the company's financial records is presented in the following table:
$\begin{array}{lr}\text { Equipment, December 31, Year 1 } & \$ 300,000 \\\text { Equipment, December 31, Year 2 } & 400,000 \\\text { Accumulated depreciation, December 31, Year 1 } & 80,000\\\text { Accumulated depreciation, December } 31 \text {, Year } 2&60,000\end{array}$ During Year 2, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the sale of the equipment. Only one equipment sale was made during the year.
-How would the cash flow effects of the changes in the equipment and accumulated depreciation accounts be reported on a statement of cash flows when the indirect method is used to prepare the operating activities section?

A) Cash proceeds from the sale of the equipment would be reported as a cash outflow in the investing activities section.
B) The cash paid to purchase equipment would be reported as a cash outflow in the investing activities section.
C) Depreciation expense would be subtracted from net income in the operating activities section.
D) A loss on the sale of the equipment would be subtracted from net income in the operating activities section.