Question

Fizzzle Inc. sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale. How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

Answer 1

Answer:

The gain is subtracted from net income in the operating activities section

Explanation:

Given that

Sale value of an equipment = $230,000

And, the gain on the sale = $45,000

So by considering the above information

We can say that the Sale value of an equipment is shown in the investing activities as a cash inflow while the gain on the sale is to be subtracted from the net income in the operating activities and if there is a loss than it would be added to the net income