A company uses the indirect method to prepare the statement of cash flows, how w

Question

A company uses the indirect method to prepare the statement of cash flows, how will a gain from the sale of equipment be presented on the statement of cash flows?

A. A gain from the sale of equipment will be added to net income in the operating activities section on the statement of cash flows.

B. A gain from the sale of equipment will be deducted from net income in the operating activities section on the statement of cash flows,

C. A gain from the sale of equipment will be deducted from net income in the operating activities section on the statement of cash flows.

D. A gain from the sale of equipment will be an addition in the investing activities section on the statement of cash flows.

Explanation / Answer

A Gain from the sale of equipment will be deducted from net income in the operating activities section on the statement of cash flows.

Conclusion:- The option B and C both are the same in the question. Therefore, both options are right.

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