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Topic
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Can someone explain me why the gain on sale of equipment is not considered cash flow from investing activities?
In preparing its cash flow statement for the year ending December 31, 20X1, Reve Co. collected the following data:
Gain on sale of equipment $ (6,000)
Proceeds from sale of equipment 10,000
Purchase of A.S., Inc., bonds
(par value $200,000) (180,000)
Amortization of bond discount 2,000
Dividends declared (45,000)
Dividends paid (38,000)
Proceeds from sale of treasury
stock (carrying amount $65,000) 75,000
In its December 31, 20X1, statement of cash flows, what amount should Reve report as net cash used in investing activities?
Answer:
Cash inflows from investing activities:
Proceeds from sale of equipment $ 10,000
Cash outflows for investing activities:
Purchase of A.S., Inc., bonds (180,000)
Net cash used in investing activities $170,000
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