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# If an analysis of the general ledger accounts indicates that equipment.docx

If an analysis of the general ledger accounts indicates that equipment, which had cost \$168,000 and on which accumulated depreciation totaled \$135,000 on the October 1st was sold for \$20,000. During 2009 the depreciation on the equipment was \$30,000.

How will the above items be shown (operating, financing, investing) on the statement of cash flows and are they added or subtracting in the statement of cash flows?
Solution
1) \$30,000 will be added to Cash flow from operating activities because of the current year depreciation amount. As depreciation is a non-cash charge we will add it back to net income.
2) \$20,000 will be added to Cash flows from investing activities as it generated cash inflows from the sale of the equipment.
3) \$17,000 will be deducted from Cash flow from operating activities on account of gain from sale of equipment. Gain on sale of equipment = Cost of equipment
.

If an analysis of the general ledger accounts indicates that equipment, which had cost \$168,000 and on which accumulated depreciation totaled \$135,000 on the October 1st was sold for \$20,000. During 2009 the depreciation on the equipment was \$30,000.

How will the above items be shown (operating, financing, investing) on the statement of cash flows and are they added or subtracting in the statement of cash flows?
Solution
1) \$30,000 will be added to Cash flow from operating activities because of the current year depreciation amount. As depreciation is a non-cash charge we will add it back to net income.
2) \$20,000 will be added to Cash flows from investing activities as it generated cash inflows from the sale of the equipment.
3) \$17,000 will be deducted from Cash flow from operating activities on account of gain from sale of equipment. Gain on sale of equipment = Cost of equipment
.