EX 16-9 Reporting changes in equipment on statement of cash flows

An analysis of the general ledger accounts indicates that office equipment, which cost $144,000 and on which accumulated depreciation totaled $60,000 on the date of sale, was sold for $72,000 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…………………………………………… $72,000
The loss on the sale, $12,000 ($72,000 proceeds from sale less $84,000 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.