Question

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 $63,000 from investing activities and a deduction from net income of $9,000

b. an increase of $54,000 from investing activities

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

Answer 1

Gain on sale=$63,000-$54,000

=$9,000 deduction from net income.

Sold building is an increase in investing activity.

So the option is A.