Answer:
B. $100,000 subtraction from net income $400,000 cash inflow
Explanation:
The income statment will include a loss on disposal.
The book value is 500,000 and was sold at 400,000
The loss on disposal will be 100,000
For the cash flow statement will recognize the cash proceeds from investment activities. It will ignore the loss on disposal. Cash generated on disposal of equipment will be 400,000
A.- INCORRECT the net income decrease, as it was a loss, not a gain.
C.- INCORRECT the net income decrease, as it was a loss, not a gain.
D.- INCORRECT the cash flow will recognize the amount of cash received. Which is 400,000 not 500,000.
