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29 July, 06:11

Fox Co. sold used equipment for a cash amount equaling its carrying amount for both book and tax purposes. Later that year, Fox replaced the equipment by paying cash and signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash received for the old equipment. How should these equipment transactions be reported in Fox's statement of cash flows? Group of answer choices

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  1. 29 July, 09:26
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    The correct answer is letter "B": Cash inflow equal to the cash received and a cash outflow equal to the cash paid.

    Explanation:

    The cash inflow equals to the amount of money received for the old equipment sold and cash outflow equivalent to the money paid for the brand new equipment. The note payable is not a cash outflow, and the cash outflow received should not be decreased.
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