A gain on the sale of a fixed asset is reported on the statement of cash flows _____.
A)as an adjustment to operating activities under the indirect method
B)as an adjustment to operating activities under the direct method
C)as an adjustment to operating activities, regardless of the method used
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

A gain on the sale of a fixed asset would be reported as a cash inflow under the operating activities section of the statement of cash flows using the indirect method. It would be added to net income and adjusted for non-cash items to arrive at the operating cash flow. It would not be reported separately under the direct method. Therefore, option A is the correct answer.

A Gain on the Sale of a Fixed Asset Is