During the year, the Property, Plant and Equipment account increased by $25,000 and the Accumulated Depreciation account increased by $2,000. In addition, the company sold equipment, which originally cost $12,000 and had $9,000 of accumulated depreciation, for $4,500. What was the cash inflow from the sale of property, plant, and equipment?

Question

Quizplus · Accepted Answer

The increase in Property, Plant, and Equipment account of $25,000 does not provide any information about cash inflows or outflows. The increase in Accumulated Depreciation account of $2,000 only provides information about non-cash expenses. The sale of equipment with a cost of $12,000 and accumulated depreciation of $9,000 means that the book value of the equipment is $3,000 ($12,000 - $9,000). Selling the equipment for $4,500 means that the company received a cash inflow of $4,500. Therefore, the cash inflow from the sale of property, plant, and equipment is $4,500, as shown in option B.

During the Year, the Property, Plant and Equipment Account Increased