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When using the indirect method to complete the cash flows from operating activities section of the statement of cash flows, what is the proper disposition of a loss on disposal of equipment?.

Respuesta :

The correct answer is to subtract the loss from net income proceeds from the sale of equipment ought to be included in net income within the working activities area. A loss on the deal of arrival ought to be added to net income within the working exercises segment.

What do you understand by Subtracting the loss from net income?

  • In Accounting, under the indirect method of assessing or calculating money flow, the starting net cash flow is decided that’s enrolled within the course of all the working exercises in business. Any beginning net salary or net loss is registered within the starting beneath the round about strategy of completing money stream from working activities.
  • Any non-cash costs or costs such as deterioration of physical resources and gear or amortization are included in the starting net wage level.
  • Presently, any profit or misfortune from the transfer of long-term resources is subtracted from the net wage to decide the cash stream of working activity

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