An entity using the indirect method sells a building for $200,000. The building was purchased for $400,000 and has accumulated depreciation of $300,000 at the date of sale. The entity will classify the $100,000 gain as an operating cash receipt, and the remainder as an investing activity.

Question

Quizplus · Accepted Answer

The entire proceeds from the sale of the building, $200,000, would be classified as an investing activity in the cash flow statement. Gains or losses from the sale of a building are adjustments to reconcile net income to net cash provided by operating activities, not classified as operating cash receipts.

An Entity Using the Indirect Method Sells a Building for $200,000