Madison Company owned an asset that had cost $44,000.The company sold the asset for $16,000.Accumulated depreciation on the day of sale amounted to $32,000.Which of the following statements is true?
A)A $16,000 cash inflow in the investing activities section of the cash flow statement.
B)A $16,000 increase in total assets.
C)A $4,000 gain in the investing activities section of the statement of cash flows.
D)A $4,000 cash inflow in the financing activities section of the cash flow statement.

Question

Quizplus · Accepted Answer

The sale results in a cash inflow from investing activities of $16,000,the cash received on the sale.The sale increases assets (cash)by $16,000,decreases assets (equipment)by $44,000,and increases assets (by decreasing accumulated depreciation,a contra asset account)by $32,000,resulting in a net increase in assets of $4,000.

Madison Company Owned an Asset That Had Cost $44,000