Question

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 operationsb. Decrease Net Cash from operations on the Cash Flow Statementc. No impact on Net Cash from operationsd. Just impact the Balance Sheet

Answer 1

d. Just impact the Balance Sheet

Step-by-step explanation:

Depreciation: The depreciation is an expense that shows a reduction in the value of the fixed assets due to tear and wear, obsolesce, usage, time period, etc. It is shown on the debit side of the income statement.

It is a non-cash item that does not affect the cash balance. So, it would not affect the cash flow statement

It just impacts the balance sheet as it reduces the amount of the assets and increases the cash balance and account receivable balance as the case given.