Office equipment with accumulated depreciation of $110,000 is sold for cash, resulting in a loss of $25,000. If this office equipment originally had a cost of $200,000, the amount of cash inflow reported in the statement of cash flows relative to the sale is Select one: a. $ 65,000. b. $135,000. c. $ 25,000. d. $ 85,000. e. $175,000.

Question

Business

Baron Coffey

29 May, 08:38

Office equipment with accumulated depreciation of $110,000 is sold for cash, resulting in a loss of $25,000. If this office equipment originally had a cost of $200,000, the amount of cash inflow reported in the statement of cash flows relative to the sale is Select one: a. $ 65,000. b. $135,000. c. $ 25,000. d. $ 85,000. e. $175,000.

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Answers (2)

Know the Answer?

Tiara Mccall · Answer 1

Correct answer is a) $65000

Explanation:

Original Cost=200000

Less: Accumulated dep = -110000

Book value=90000

Less: Loss on sale of equipment=-25000

Cash receive from sale of equipment=65000

Daniela Greene · Answer 2

a. $ 65,000

Explanation:

The cost of the asset less the accumulated depreciation gives the net book value.

When an asset is disposed at a price lower than the net book value, the company makes a loss on disposal and where the the net book value is lower than the sales proceeds, the company makes a gain on disposal.

Net book value = $200,000 - $110,000

= $90,000

If the company made a loss of $25,000 on disposal,

the sales proceed = $90,000 - $25,000

= $65,000

This is the amount that will be presented in the statement of cash flow as an inflow in the investing section.