A gain on the sale of long-term assets is added to net income to arrive at net cash flows from operating activities under the indirect method.

Question

Quizplus · Accepted Answer

A gain on the sale of long-term assets is a non-cash activity and is therefore added to net income when using the indirect method to calculate net cash flows from operating activities. It is subtracted if there is a loss on the sale of long-term assets.

A Gain on the Sale of Long-Term Assets Is Added