A company uses the indirect method to prepare the statement of cash flows.It sold a piece of equipment at a loss 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

In the indirect method, a loss on the sale of equipment is added back to net income in the operating activities section because it is a non-cash expense that reduced net income.

A Company Uses the Indirect Method to Prepare the Statement