Question

Vargas company sold a piece of land for $39,000 that had originally cost $32,500. this event would:

Answer 1

ANSWER: The event would generate a profit for the company.

Step-by-step explanation: Vargas company sold the piece of land for $39,000 which had the originally cost of $32,500. This event will generate a profit for the company of $6,500. The profit is calculated as the difference between selling price of the land and the original cost of the land, which is $39,000 - $32,500 = $6,500. This is not a revenue for the company but an increase in the cash flow of the company.

Answer 2

Given that the piece of land had an initial cost of $32,500 and Vargas company sold it for $39,000. The profit realizable will be:
Profit=Buying price-selling price
=39000-32500
=$6500
This implies that this event would give the company a profit of $6500, the event will not affect the operating income and increase cash flows from investing activities by $39,000 hence the answer is:
D] all of these answer choices are correct.