A Machine with a Cost of $196,500,and a Carrying Value

question 43

Multiple Choice

A machine with a cost of $196,500,and a carrying value of $84,900,was sold at a loss of $13,700.This transaction would be reported on a statement of cash flows using the indirect format as a(n) :

• A)$111,600 inflow from investing activities and a $13,700 outflow from operating activities
• B)$97,900 inflow from investing activities and a $13,700 addition to net income
• C)$84,900 inflow from investing activities and a $13,700 addition to net income
• D)$71,200 inflow from investing activities and a $13,700 addition to net income.

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Definitions:

Purchase Price

The amount of money that is paid to acquire a good, service, or asset.

New Business Site

The location chosen for establishing a new branch, office, or manufacturing facility of a company.

Patent

A legal right granted by the government to an inventor, giving the holder exclusive rights to use, make, or sell the invention for a certain period.

Intangible Assets

Assets lacking physical substance, such as patents, trademarks, and goodwill, that are nevertheless valuable to a company.