The value of loss on sale equipment of 2 years is$16751 and $2436
Req 1
Cash flow from investing activities year 1 year 2
proceeds from sale of equipment $17864 $12163
The amount reported in the cash flow from investing activities section of the statement of cash flow is the total cash proceeds from the sale of the equipment regardless of the amount of any gain or loss
Req 2
Any gain on the sale of the equipment is subtracted from net income to avoid double counting of the gain .Any loss on the sale of the equipment is added to avoid double counting of the loss
Cash flow from operating activities year1 year2
Loss (gain)on sale equipment $16751 $2436
Computations :
Plant and machinery (at cost) 75000 13500
Accumulated depreciation 40385 3773
Net book value 34615 9727
Cash proceeds - Net book value 16751 2436
The complete question is : During two recent years Perez Construction, Inc., disposed of the following plant and equipment: Year 1 Year 2 Plant and equipment (at cost) $ 75,000 $13,500 Accumulated depreciation on equipment disposed of 40,385 3,773 Cash received 17,864 12,163 Gain (loss) on sale (16,751) 2,436
Required: 1. Determine the cash flow from the sale of property for each year that would be reported in the investing activities section of the cash flow statement.
2. Perez uses the indirect method for the operating activities section of the cash flow statement. What amounts related to the sales would be added or subtracted in the computation of Net Cash Flows from Operating Activities for each year?
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