Final answer:
The correct value to include in the operating activities section of the Statement of Cash Flows using the indirect method for the sale of a fixed asset with a gain of $4,500 is option (b) ($4,500), as gains are subtracted from net income in the cash flow from operating activities.
option b is the correct
Step-by-step explanation:
The scenario presented involves a corporation that uses the indirect method for preparing the Statement of Cash Flows. When a fixed asset is sold using the indirect method, the actual cash received from the sale is not reported in the operating activities section. Instead, the gain (or loss) realized from the sale is eliminated because the gain has already been included in the net income. The net income starts the operating activities section of the Statement of Cash Flows, and since the $4,500 gain increased the net income, we need to subtract it from net income to arrive at the cash flow from operating activities.
In this case, the correct entry in the operating activities section of the cash flow statement related to the asset sale would be option (b) ($4,500). This adjusts for the overstatement of net income due to the gain on the sale of the fixed asset. Accordingly, the gain is deducted to calculate the net cash provided by operating activities.