Question

Marvin industries owns a piece of equipment with a cost of $132,000 and accumulated depreciation of $89,000. the equipment is sold for $50,600 cash. the amount that should be reported as a cash inflow from investing activities is:

O $50,600.
O $7,600.
O $43,000.
O $0; this transaction is a financing activity.

Answer 1

In the sale of equipment by Marvin Industries, the cash inflow from investing activities to be reported on the cash flow statement is the sale price of $50,600, representing the actual cash received from the sale. O $50,600.

Step-by-step explanation:

The question concerns the sale of a piece of equipment by Marvin Industries for cash, and asks which amount should be reported as a cash inflow from investing activities. Given the cost of the equipment ($132,000), the accumulated depreciation ($89,000), and the sale price ($50,600), the cash inflow from selling the equipment is just the sale price of $50,600.

This is because in accounting, the cash inflow from the sale of an asset in the investing section of the cash flow statement is the amount of cash received. The gain or loss on the sale is a separate calculation where you would subtract the book value of the asset (cost minus accumulated depreciation) from the sale proceeds. Therefore, the answer is $50,600 and not the gain or loss figure.