A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows: a. an increase of $9,000 from investing activities b. an increase of $63,000 from investing activities and a deduction from net income of $9,000 c. an increase of $54,000 from investing activities and an addition to net income of $9,000 d. an increase of $54,000 from investing activities

Question

Business

Emery Morris

17 August, 13:06

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows: a. an increase of $9,000 from investing activities b. an increase of $63,000 from investing activities and a deduction from net income of $9,000 c. an increase of $54,000 from investing activities and an addition to net income of $9,000 d. an increase of $54,000 from investing activities

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Answers (1)

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Brooklynn Osborn · Answer 1

The correct answer is option (a).

Explanation:

According to the scenario, the given data are as follows:

Book value = $54,000

Sold value = $63,000

As selling of property is the increase in investing activities.

So, we can calculate the gain value by using following formula:

Gain value = Sold value - Book value

Gain value = $63,000 - $54,000

= $9,000

Hence, the transaction should be shown as an increase of $9,000 from investing activities