The Operating Activities section of Miller Corp.'s statement of cash flows reported an adjustment for depreciation expense

Question:

The Operating Activities section of Miller Corp.'s statement of cash flows reported an adjustment for depreciation expense of $25,000, as well as another for a loss on the sale of equipment of $5,000 (the equipment was sold on the last day of the year). The equipment was Miller's only long-term asset, and it had a book value of $80,000 at the beginning of the year.

Required

1. Is the depreciation expense added or deducted in the Operating Activities section of the statement of cash flows? Is the loss added or deducted in this section?

2. What other section of the statement of cash flows will be affected by the sale of the equipment? What amount will appear in this section?

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