In a Statement of Cash Flows, If Equipment Is Sold

question 9

Multiple Choice

In a statement of cash flows, if equipment is sold at a gain, the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment

• A) with no addition or subtraction.
• B) plus the gain and less the amount of tax attributable to the gain.
• C) plus both the gain and the amount of tax attributable to the gain.
• D) plus the gain only.

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Definitions:

Equity Ownership

Equity ownership denotes the holding of shares in a company, thereby providing the shareholder a claim on a portion of the corporation's assets and earnings.

Corporate Takeover

The acquisition of one company by another, through either direct purchase or by acquiring a majority stake in the target company’s equity.

P/E Ratio

The price-to-earnings ratio, a measure of a company's current share price relative to its per-share earnings.

Debt-equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its shareholder equity, indicating how much debt is used to finance assets.