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Basic Question 10 of 11
True or False?
A transaction in which an asset that cost $45,000, had a book value of $4,000, and was sold for $3,000 would appear on the statement of cash flows as an investing activity of $4,000.
User Contributed Comments 3
| User | Comment |
|---|---|
| johntan1979 | If the questions stated that the asset was purchased for $45,000, then the answer is $42,000 net cash outflow. |
| johntan1979 | Loss on sale = book value - amount sold = $1,000 This is ADDED back to net income under indirect method. Depreciated value = cost - book = $41,000 This is ADDED to depreciation expense, which is then ADDED back to net income. |
| fredpat01 | Thank you Johntan1979! |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data
CFA® 2024 Level I Curriculum, Volume 2, Module 4.