A machine with a cost of $130,000, accumulated depreciation of $85,000, and current year depreciation expense of $17,000 is sold for $40,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:A. $45,000. B. $5,000. C. $17,000. D. $28,000. E. $40,000.

Question

Cherish Oneill

Business

29 June, 08:51

A machine with a cost of $130,000, accumulated depreciation of $85,000, and current year depreciation expense of $17,000 is sold for $40,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:A. $45,000. B. $5,000. C. $17,000. D. $28,000. E. $40,000.

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Alejandro · Answer 1

Option E: $40,000 - Cash from sale of Machine

Explanation:

Cash flow from Investing activities section of the cash flow statement should include cash received on the sale of property, plant & equipment, cash paid to acquire property, plant & equipment, cash paid for investments in or as loans to other companies and dividends received from any investments.

In case of sale of a Machine, $40,000 received on sale should be reported as source of cash in the cash flows from investing activities section.