Bob bought a new car on January 20, 2016. The car cost 35,000, had a useful life
ID: 2611425 • Letter: B
Question
Bob bought a new car on January 20, 2016. The car cost 35,000, had a useful life of five years, and a salvage value of 5,000. Bob depreciates assets using straight line method. Bob sold the car to carmax (a used-car dealer) on January 20, 2018 for 16,000. How would Bob report this transaction on his Statement of Cash Flows? a.) An increase in cash of $16,000 in Financing Activities b.) A decrease in cash of $19,000 in Financing activities c.) An increase in Cash of $16,000 in investing activities d.) A decrease in Cash of $19,000 in investing activities
Explanation / Answer
Sales of car in $16000 is cash flow from investing transaction.
So answer is c.) An increase in Cash of $16,000 in investing activities
Cash flow from investing activities Car sold 16000