A building with a book value of $54,000 is sold for $63,000 cash Using the indirect method, this transaction should be shown on the statement of cash flows as follows:
A) an increase of $54,000 from investing activities
B) an increase of $63,000 from investing activities and a deduction from net income of $9,000
C) an increase of $9,000 from investing activities
D) an increase of $54,000 from investing activities and an addition to net income of $9,000

Question

Quizplus · Accepted Answer

The cash received from the sale is $63,000, which is an increase in cash from investing activities. The gain on sale ($63,000 - $54,000 = $9,000) is deducted from net income in the operating activities section because it is a non-cash item included in net income.

A Building with a Book Value of $54,000 Is Sold