Nickels Inc.prepares its statement of cash flows using the direct method.If Nickels sells equipment for a gain of $35,000 when the book value is $100,000,what amount will be reported on the statement of cash flows operating activities section related to this gain?
A)$0
B)($35,000)
C)($65,000)
D)$65,000
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

Gains on the sale of equipment are not reported in the operating activities section of the statement of cash flows when using the direct method. Instead, the cash received from the sale is reported in the investing activities section. The gain itself does not affect cash flow from operating activities.