Question

If a gain of $7,000 results from selling (for cash) office equipment having a book value of $55,000, the amount reported in the Cash flows from operating activities section of the statement of cash flows using the indirect method is

Answer 1

The amount reported in the Cash flows from operating activities is - $7,000.

Step-by-step explanation:

Cash flow from Operating Activities under indirect method reconciles the Operating Profit to the Operating cash flows by making adjustments on Operating Profit for non-cash items previously added or deducted from it as well as changes in working capital.

The gain was previously added to reach Operating Profit there, this is deducted to arrive at Operating Cash flow figure since the gain on sale is a non-cash item.

The amount reported in the Cash flows from operating activities is - $7,000.