Question

Last year Acre charged $3,364,267 Depreciation on the Income Statement of Andrews. If Acre sold a fully depreciated piece of equipment at a loss, the effect on Andrews's financial statements would be (all other items remaining equal):

A. Increase Net Cash from operations
B. No impact on Net Cash from operations
C. Decrease Net Cash from operations on the Cash Flow Statement
D. Just impact the Balance Sheet

Answer 1

The effect on Andrews's financial statements when Acre sells a fully depreciated piece of equipment at a loss would be a c)decrease in Net Cash from operations on the Cash Flow Statement. The sale of the equipment would also impact the Balance Sheet.

Step-by-step explanation:

The effect on Andrews's financial statements when Acre sells a fully depreciated piece of equipment at a loss would be a decrease in Net Cash from operations on the Cash Flow Statement. This is because the sale of the equipment results in a loss, which reduces the overall cash flow from operations. It would not impact Net Cash from operations, as it is a loss and not a gain.

Additionally, the sale of the equipment would also have an impact on the Balance Sheet. The loss would be recorded as a reduction in the equipment's book value and would likely reduce Andrews's overall assets.