Help please MC Qu.184 A company bought .. A company bought $650,000 of equipment
ID: 2481517 • Letter: H
Question
Help please MC Qu.184 A company bought .. A company bought $650,000 of equipment with an expected life of 18 years and no residual value. After 14 years the company sold the equipment for $108,500. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows? (Do not round intermediate calculations. Round your answer to nearest whole number.) O $108,500 is recorded as a cash inflow from investing activities and $35,944 is subtracted to convert net income to net cash flow provided by operating activities. O $108,500 is recorded as a cash inflow from investing activities and no other sections of the statement are O $108,500 is recorded as a cash inflow from operating activities. O $108,500 is recorded as a cash inflow from, investing activities and $35,944 is added to convert net income affected to net cash flow provided by operating activities
Explanation / Answer
Answer 184
Annual depreciation = $650000 / 18 = $36111.11
Accumulated depreciation for 14 years = 14 x $36111.11 = $505556
Book value after 14 years = $650000 - $505556 = $144444
Loss on sale of the equipment = $144446-$108500 = $35944
$108500 is recorded as a cash inflow from investing activities and $35944 is added to convert net income to net cash flow provided by operating activities.
Answer 128
Option D
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