A Company Purchased Property for $300,000

question 106

Multiple Choice

A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000.
-The equipment will be recorded at a cost of

• A) $125,000.
• B) $120,000.
• C) $118,723.
• D) $115,384.

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Definitions:

Indirect Method

A cash flow statement approach that adjusts net income for changes in balance sheet accounts to convert it from an accrual basis to a cash basis.

Net Income

The amount of profit that remains after all operating expenses, taxes, and costs have been subtracted from total revenue.

Net Cash

Net cash refers to the amount of cash that remains after subtracting a company's total cash outflows from its total cash inflows, indicating the company's liquidity position.