Atkins Corporation Has Provided the Following Information for the Year

question 1

Multiple Choice

Atkins Corporation has provided the following information for the year ended December 31, 2016: • The equipment account balance increased by $200,000 from the beginning of the year to the end of the year.
• The equipment accumulated depreciation account balance increased by $35,000 from the beginning of the year to the end of the year.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense recorded on the equipment during the year was $65,000.
Which of the following statements is correct with respect to determining cash flow from investing activities? Assume that the equipment purchase and sale resulted in cash flows.

• A)A $60,000 cash inflow is reported from the equipment sale.
• B)A $200,000 cash outflow is reported for equipment purchases.
• C)A $50,000 cash outflow is reported for the equipment sale.
• D)A $250,000 cash outflow is reported for equipment purchases.

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Definitions:

Preferred Stock

A type of stock that grants holders preference in dividend payments and assets in the event of a liquidation, often without voting rights.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Market Value

The prevailing rate at which a service or asset is available for purchase or sale in a market.

Capital Asset Pricing Model

A formula used to determine the expected return on an investment, considering risk and the time value of money.