A Machine with a Cost of $130,000 and Accumulated Depreciation

question 127

Multiple Choice

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

• A) $50,000.
• B) $5,000.
• C) $45,000.
• D) Zero. This is an operating activity.
• E) Zero. This is a financing activity.

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Definitions:

Nonsystematic Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.

Diversifiable Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or nonsystematic risk. Nondiversifiable risk refers to systematic or market risk.

Market Risk

Also known as systemic risk, it's the potential for investors to experience losses due to factors that affect the overall performance of the financial markets.

Unique Risk

Referred to as unsystematic risk, it denotes the risk linked to a particular company or sector.