Computing and Reporting Cash Flow Effects of Sale of Plant and Equipment. The following information applies to the questions displayed below.

During two recent years, Perez Construction, Inc., disposed of the following plant and equipment:

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. (List cash outflows as negative amounts.)

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? (Amounts to be deducted should be indicated with a minus sign.)

Transcribed Image Text:

Plant and equipment (at cost) Accumulated depreciation on equipment disposed of Cash received Gain (loss) on sale Year 1 $ 76,500 43,385 20,864 (12,251) Year 2 $16,500 5,273 15,163 3,936 Plant and equipment (at cost) Accumulated depreciation on equipment disposed of Cash received Gain (loss) on sale Year 1 $ 76,500 43,385 20,864 (12,251) Year 2 $16,500 5,273 15,163 3,936

Answer rating: 100% (QA)

Answer Solution 1 PEREZ CONSTRUCTIONS INC Year 1 Year 2 Cash Flows from Investing Ac... View the full answer