Question

A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for $24,241 representing a gain of $3,478. The value in the operating activities section regarding this event would be

Answer 1

($3,478)

Step-by-step explanation:

The above means that the amount of gain on sale of fixed asset should be deducted from net income so as to get the cash flow from the operating activities because it is an increase in net income for the period under review.

It is to be noted that where non cash expense such as depreciation is given, such will be added back while non cash revenue is deducted to arrive at the net cash flow from operating activities.