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

question 72

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

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Definitions:

Fair Value

What is expected as profit from selling an asset or what is required as payment to transfer a liability in a smooth market transaction on the established measurement date.

Costs To Sell

Expenses directly associated with the disposition of an asset, including legal, broker's, and advertising fees, which can reduce the profit realized on the sale.

External Evidence

Information obtained from independent sources outside an entity that can be used to support financial statement assertions.