EX 16-10 Reporting changes in equipment on statement of cash flows

An analysis of the general ledger accounts indicates that delivery equipment, which cost $80,000 and on which accumulated depreciation totaled $36,000 on the date of sale, was sold for $37,200 during the year. Using this information, indicate the items to be reported on the statement of cash flows.


Answer:

Cash flows from investing activities:
Cash received from sale of equipment…………………………………………… $37,200
The loss on the sale, $6,800 ($37,200 proceeds from sale less $44,000 book
value), would be added to net income in determining the cash flows from
operating activities if the indirect method of reporting cash flows from
operations is used.