Final answer:
The sale of the five luxury SUVs by Hotel Victoria for $250,000 affects the investing activities section of the cash flow statement. The accumulated depreciation and loss on sale would show in the reconciliation from net income to net cash provided by operating activities. The cash inflow from the sale is recorded as an investing activity.
Step-by-step explanation:
The cash flow section that will be affected by Hotel Victoria's sale of five luxury SUVs is the investing section. They sold the vehicles for $250,000 after purchasing them for $350,000, which means they sold them at a loss considering the book value after accumulated depreciation. To assess the impact on the cash flow statement, one should note that the accumulated depreciation reduces the carrying amount of the assets, and the loss on sale would be reflected under the cash flows from investing activities.
When assets such as vehicles are sold, the cash received from the sale is considered an inflow and is recorded in the investing section of the cash flow statement. This is because selling fixed assets is related to the investment in the business's long-term assets. However, a loss (when the sale proceeds are less than the book value) does not affect the cash flows but is a non-cash transaction that would be adjusted in the reconciliation from net income to net cash provided by operating activities.