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The following three accounts appear in the general ledger of Ivanhoe Company during 2022. Equipment Date Debit Credit Balance

From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect mConstruction of Equipment 34450 | Sale of Equipment 31850 T Net Cash used by Investing Activities 143650 Net Cash Provided by

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Answer #1
Ivanhoe Company
Partial Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flow from Operating Activites:
   Net Income $46,800
Adjustments to reconcile net income to
Net cash provided by Operating Activites
     Depreciation expense $18,200
     Loss on disposal of equipment $5,200
$23,400
     Net Cash provided by Operating Activites   [$46,800 + $23,400] $70,200
Cash Flows from Investing Activities:
   Sale of Equipment                                            [Refer working note] $16,250
   Construction of Equipment ($34,450)
   Purchase of Equipment ($45,500)
   Net Cash Used by Investing Activites          [$16,250 - $34,450 - $45,500] ($63,700)
Cash Flow from Financing Activities:
   Payment of Cash dividends ($9,100)

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Working note - Computation of cash proceeds on sale of equipment Cost of equipment sold = $31,850 refer equipment ledger Accu

Working note - Computation of cash proceeds on sale of equipment Cost of equipment sold = $31,850 refer equipment ledger Accumulated depreciation of the equipment sold = $10.400 refer Accumulated depreciation - Equipment ledger Book value of the equipment sold = Cost - Accumulated depreciation = $31.850 - $10.400 = 21,450 Loss on sale of equipment = $5,200 mentioned in question Loss on sale of equipment = Book value - Sale value Above formula can be rearranged as follows: Sale value = Book value - Loss on sale = $21,450 - $5,200 = $16,250 Cash proceeds received by the company from the disposal of the equipment

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