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Last year Abby charged $5,600,000 Depreciation on the Income Statement of Andrews. If early this year...

Last year Abby charged $5,600,000 Depreciation on the Income Statement of Andrews. If early this year Abby sold all its depreicable assets for their book value, the effect on Andrews's financial statements would be (all other items remaining equal):

A. Just impact the Balance Sheet

B. Increase Net Cash from operations

C. Decrease Net Cash from operations on the Cash Flow Statement

D. No impact on Net Cash from operations
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Answer #1

D - No impact on Net Cash from operations.

This is because selling a depreciable asset will lead to profits/losses which will change the Fixed Assets of the company. This will definitely impact the Overall Net Income Statement. Profits/losses would be determined by the value at which it is currently available on the balance sheet and the market value at which it is sold. This is not a part of core operations of the company which is products/services it sells to its clients/customers.

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