A Company Uses the Indirect Method to Prepare the Statement

question 19

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows.It sold a piece of equipment at a gain of $3,600.The equipment was purchased several years ago for $70,500 and had accumulated depreciation of $52,900.What is reported under the operating activities section on the statement of cash flows?

• A)Cash proceeds of $21,200 are subtracted from net income.
• B)Cash proceeds of $21,200 are added to net income.
• C)The gain of $3,600 is added to net income.
• D)The gain of $3,600 is subtracted from net income.

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