[mattsav]

I had a question about NINJA FAR MCQ #1534.

The question asks what should be included in net cash provided by operating activities based on a number of transactions. I answered the question incorrectly, and the detail for the correct answer included “Equipment gain on sale transaction” as being an operating activity. I had the understanding that PP&E sale gains should be an investing activity, not an operating activity. Could anyone confirm if I am right/wrong? Thanks.

[satyakatiwal]

PPE gain is included in NI and sale proceeds of PPE are also included in investing activities.
So you remove Gain from Operations otherwise you will be counting cash twice .
Example: $2 profit by selling Fixed assets at $12 .
If you don’t deduct $2 from operating than your cash inflows will be 14 ( instead of 12 ).

[Lamis]

This transaction gain or loss should be in operating section while the proceeds are on investing section

[Author]

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