Avatar Company Uses the Indirect Method to Prepare Its Statement

question 13

Essay

Avatar Company uses the indirect method to prepare its statement of cash flows. During 2014, plant assets with book value of $10,000(cost $10,000 and accumulated depreciation $0)were sold for $14,000. Using the worksheet shown below, enter the adjustments needed to record the sale of plant assets and gain on sale of plant assets of $4,000. Net Increase (Decrease)in Cash
Total

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Definitions:

Tax Deductible

Expenses that can be subtracted from gross income to reduce the taxable income, potentially lowering overall tax liability.

Net After-Tax Income

The amount of income that remains for a business or individual after all taxes have been deducted from total revenues.

Total Assets

The sum of all assets owned by a company, including both current and non-current assets, indicating the total resources at its disposal.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of the shareholders.