Question

If a gain of $7,600 results from selling (for cash) office equipment having a book value of $55,100, the amount reported in the Cash Flows from (used for) Operating Activities section of the statement of cash flows using the indirect method is

Answer 1

The amount reported in the Cash Flows from (used for) Operating Activities section of the statement of cash flows using the indirect method is $7,600.

Cash flow from operating activities sections:

Based on the information given the amount that will be reported in the Cash Flows from (used for) Operating Activities section of the statement of cash flows using the indirect method is the gain amount of $7,600.

This  gain is the gain from selling office equipment and this amount must be deducted from net income in the operating activities section of the statement of cash flows.

The reason why we have to deduct the $7,600 is because under accrual basis of accounting  the amount represent a noncash addition to net income.

Inconclusion the amount reported in the Cash Flows from (used for) Operating Activities section of the statement of cash flows using the indirect method is $7,600.

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