Answer:
Increase of $63,000 from investing activities
and a deduction from net income of $9,000
Explanation:
The sales and purchase of assets fall under the investing activities. However the profit or loss realized from such transaction would have increased or decreased the net income as the case may be . Therefore this item of profit or loss which do not represent cash flow would be adjusted on the net income accordingly.
Profit on sale of building = 63,000 - 54,000 = $9,000
The transaction would be shown on the statement of cash flow as follows:
Net income
Less profit on sales of asset (9,000)
Investing activities:
add cash from Sale of asset 63,000
The entries are summarized below:
Increase of $63,000 from investing activities
and a deduction from net income of $9,000
