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So I was working through some of the practice questions, and I don’t know why they didn’t take into consider loss on equipment sale as an outflow. Question is as follows:
Proceeds from sale of
equipment: 32000Loss on equipment sale:
9000Dividends paid: 12500
Purchase of office
premises: 100000Common Stock
repurchases: 45000Dividends received:
8500Interest received: 1200
Supplier accounts paid:
3700Cash collections from
customers: 14200Ending Cash balance:
98000Answer:
CFI=32000-100000=-68000
gains or losses on sales of equipment are non cash charges (they are just the difference between what the asset is recorded on the balance sheet and the cash the company gets paid for the asset) so they generally aren’t reported on the cash flow statement. instead you’d see proceeds from the sales on the CF statement
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