CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

An analyst gathers the following information about three equipment sales that a company made at the end of the year:

Original Cost | Accumulated Depreciation at Date of Sale | Sales Proceeds
$200,000 | $150,000 | $70,000
$200,000 | $200,000 | $30,000
$300,000 | $250,000 | $40,000

If all other factors are equal for that that year, the company's cash flow from operations will most likely be ______.
A. $40,000 less than net income
B. $140,000 less than net income
C. the same as net income
Explanation: Equipment sale 1 results in a gain of $20,000, sale 2 results in a gain of $30,000, and sale 3 results in a loss of $10,000. The net gain is $40,000. The amount that would be deducted from net income to determine cash flow from operations is equal to the net gain of $40,000.

User Contributed Comments 3

User Comment
PowPowPow I don't understand this anwser.
- How do you get 20,000$ in gain for the sale of equipment 1?
- How do you get a loss of 10,000$ for equipment 3?
PowPowPow NVM got it
1016017829 Gain= Original Cost- Accumulated Depreciation +Sales Proceed. You are welcome
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