[CM]

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

FAR: 78 (5x)
AUD: 80 (3x)
BEC: 9/07/2016
REG: 12/06/2016

Failure is never an option.

"Faith in your own powers and confidence in your individual methods are essential to success." Roderick Stevens

[Ninjathewiley]

The gain is part of the proceeds from the “sale of equipment”.

[CM]

Thanks. That's what thought, but wasn't sure.

FAR: 78 (5x)
AUD: 80 (3x)
BEC: 9/07/2016
REG: 12/06/2016

Failure is never an option.

"Faith in your own powers and confidence in your individual methods are essential to success." Roderick Stevens

[Author]

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