Mega Sales sells some used store fixtures. The acquisition cost of the fixtures is $12,500; the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $3,000. The value of this transaction in the investing section of the statement of cash flow is?
The value of this transaction in the investing section of the statement of cash flow is the net cash inflow or outflow resulting from the sale of the used store fixtures.
To determine the value, you first need to calculate the net book value of the fixtures. The net book value is calculated by subtracting the accumulated depreciation from the acquisition cost:
Net book value = Acquisition cost - Accumulated depreciation
Net book value = $12,500 - $9,750
Net book value = $2,750
Since the fixtures are sold for $3,000, the transaction results in a net cash inflow of $3,000 - $2,750 = $250 in the investing section of the statement of cash flow.
To determine the value of this transaction in the investing section of the statement of cash flows, we need to consider the information provided.
First, let's calculate the book value of the fixtures. The book value is the acquisition cost minus the accumulated depreciation. In this case, the book value would be $12,500 - $9,750 = $2,750.
Next, we need to consider the sales price of the fixtures, which is $3,000.
Since the sales price ($3,000) is higher than the book value ($2,750), there is a gain on the sale of the fixtures. The gain is calculated as the sales price minus the book value: $3,000 - $2,750 = $250.
In the investing section of the statement of cash flows, the value of this transaction would be the cash inflow from the sale of the fixtures, which is the sales price of $3,000.
Therefore, the value of this transaction in the investing section of the statement of cash flows is a cash inflow of $3,000.