Question

If a gain of $5,278 is realized in selling (for cash) office equipment having a book value of $50,852, find the total amount reported in the cash flows from investing activities section of the statement of cash flows.
A) $5,278
B) $56,130
C) $50,852
D) $45,574

Answer 1

Answer:

B) $56,130

Explanation:

The cash flow statement shows how the company's operating, investing and financing activities affect the flow of cash by generation or use.

The investing activities section is where the purchase of fixed assets and the amount received for the disposal of these assets are accounted for.

Given that a gain was realized and the book value of  the asset was given, the amount received for the disposal

= $5,278 + $50,852

= $56,130

This is the amount that will be reported in the investing activities section of the statement of cash flows as an inflow.