Martin Company is preparing its statement of cash flows using the indirect metho
ID: 2470608 • Letter: M
Question
Martin Company is preparing its statement of cash flows using the indirect method. During the year, they sold equipment for $5,990 cash. The net book value of the asset prior to sale was $5,550. Which of the following statements is true?
The gain on sale of $440 would be added back to net income in the operating activities section.
The book value of the assets sold would be shown as a negative cash flow in the investing activities section.
The cash receipt of $5,990 would be shown as a positive cash flow in the investing activities section
The gain on sale of $440 would be shown as a positive cash flow in the financing activities section.
Explanation / Answer
The cash receipt of $5,990 would be shown as a positive cash flow in the investing activities section
The above statement is TRUE