Question

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is
a. $11,000
b. $66,000
c. $55,000
d. $44,000

Answer 1

Answer:

The answer is B. $66,000

Explanation:

What are the items under investing activities of cash flow? - Sale and purchase of long-term assets or non-current assets. Purchase is an outflow while sale is an inflow.

The book value of the sold equipment was $55,000 and gain was $11,000. Therefore the equipment was sold for:

$55,000 + $11,000

=$66,000.

So there was an inflow of $66,000.

The $11,000 gain will be shown under operating section of the cash flow.