Last year Attic charged $2,260,000 Depreciation on the Income Statement of Andrews. If early this year...
Last year Attic charged $2,260,000 Depreciation on the Income Statement of Andrews. If early this year Attic sold all its depreicable assets for their book value, the effect on Andrews's financial statements would be (all other items remaining equal):
a. Increase Net Cash from operations
b. Decrease Net Cash from operations on the Cash Flow Statement
c. No impact on Net Cash from operations
d. Just impact the Balance Sheet
Homework Answers
The answer is - D. Just impact the Balance Sheet
Sale of assets at Book value will reduce the Property, Plant and Equipment from the Balance sheet and also Increase the Cash/Accounts Receivable due to Proceeds from the sale of Assets.
And since the Depreciation is Non- Cash Expenditure it will not Impact the Cash Flow from Operating Activities.
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Currently Attic is charged $4,382,667 Depreciation on the
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Income Statement of Andrews. Andrews is planning
for an increase in this depreciation. On the financial statements
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Select: 1
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Just impact the Balance Sheet.
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