On May 1, 2021, Salad Co. sold used equipment for a cash amount equaling its carrying amount for both book and tax purposes. On May 15, 2021, Salad replaced the equipment by paying cash and signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash received for the old equipment. How should these equipment transactions be reported in Salad's 2021 statement of cash flows? a. Cash outflow equal to the cash paid and note payable less the cash received. b. Cash inflow equal to the cash received and a cash outflow equal to the cash paid. c. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable. d. Cash outflow equal to the cash paid less the cash received.
On May 1, 2021, Salad Co. sold used equipment for a cash amount equaling its carrying amount for both book and tax purposes. On May 15, 2021, Salad replaced the equipment by paying cash and signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash received for the old equipment. How should these equipment transactions be reported in Salad's 2021 statement of cash flows? a. Cash outflow equal to the cash paid and note payable less the cash received. b. Cash inflow equal to the cash received and a cash outflow equal to the cash paid. c. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable. d. Cash outflow equal to the cash paid less the cash received.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 16P
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36. On May 1, 2021, Salad Co. sold used equipment for a cash amount equaling its carrying amount for both book and tax purposes. On May 15, 2021, Salad replaced the equipment by paying cash and signing a note payable for new equipment. The cash paid for the new equipment exceeded the cash received for the old equipment.
How should these equipment transactions be reported in Salad's 2021 statement of cash flows?
a. Cash outflow equal to the cash paid and note payable less the cash received.
b. Cash inflow equal to the cash received and a cash outflow equal to the cash paid.
c. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable.
d. Cash outflow equal to the cash paid less the cash received.
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