Wisconsin Farm Equipment Company sold equipment for cash.The income statement shows a loss on the sale of $7000.The net book value of the asset was $28,900.Which of the following statements describes the cash effect of the transaction?

Question

Quizplus · Accepted Answer

The sale of the equipment for cash falls under investing activities, as it involves the sale of a capital asset. Since the net book value of the asset was $28,900 and the company recognized a loss of $7000, the cash received from the sale would be $21,900 (28,900 - 7,000). Therefore, the cash flow effect would be a positive cash flow of $21,900 from investing activities.

Wisconsin Farm Equipment Company Sold Equipment for Cash