The Sonesta Company uses the indirect method for the statement of cash flows. In 2013, they sold equipment for $4,800 cash. The net book value of the asset prior to sale was $4,000. Which of the following statements is true?
A) The gain on sale of $800 would be added back to net income in the operating activities section.
B) The book value of the assets sold would be shown as a negative cash flow in the investing activities section.
C) The cash receipt of $4,800 would be shown as a positive cash flow in the investing activities section.
D) The gain on sale of $800 would be shown as a positive cash flow in the financing activities section.

Question

Quizplus · Accepted Answer

The cash receipt of $4,800 from the sale of equipment is shown as a positive cash flow in the investing activities section, as it represents cash inflow from the disposal of a long-term asset.

The Sonesta Company Uses the Indirect Method for the Statement