A building with a cost of $153,000 and accumulated depreciation of $42,000 was sold for a $11,000 gain. When using the indirect method, the cash generated from this investing activity was $121,000.

Question

Quizplus · Accepted Answer

The cash generated from the sale of a building using the indirect method would be calculated as follows:
Sale price of building = $153,000 - $42,000 + $11,000 = $122,000
Cash generated from investing activity = Sale price of building - Book value of building = $122,000 - $153,000 + $42,000 = $11,000
Therefore, the cash generated from this investing activity would be $11,000, not $121,000.

A Building with a Cost of $153,000 and Accumulated Depreciation