Bene Company is considering selling a piece of factory equipment and buying new equipment to replace...
Bene Company is considering selling a piece of factory equipment and buying new equipment to replace it. Identify two cash flows that must be considered and how they would be determined.
Homework Answers
Answer
--Two Cash flows would be:
>Cash received from sale of equipment, and
>Cash paid for acquiring the new equipment.
>Cash received from sale of equipment would be determined by the amount of cash received from the sale. It is shown as cash inflow under "Investing" activities.
>Cash paid would be determined by calculating all the cost incurred to buy and install the acquired equipment. It is shown as cash outflow under "investing" activities.
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