Question

No Harm Corporation sold some of its used equipment with a carrying amount of 52,000 for 47,000. The indirect method statement of cash flows will reflect an addition in the investing activities section of​ _______.

A. 52,000 and a deduction of 5,000 in the operating activities section

B. 52,000 and an addition of 5,000 in the operating activities section

C. 47,000 and a 5,000 deduction of in the operating activities section

D. 47,000 and an addition 5,000 of in the operating activities section

Answer 1

Answer.

Option D is correct.

i.e On the statement of cash flows, the proceeds from the sale of long-term assets are reported in the investing activities section with the actual amount receiving or paid, not the carrying value of assets, while the loss on the sale appears in the operating activities section as a addition from net income and any gain should be subtracted from net income in Operating activities section.

Carrying value of assets = 52000

Sale value = 47000

Loss on sale of asset = 5000.

Hence option D is correct answer.

Thank you ?.