Version 04 Flashcards
1
Q
Assume that a used machine is sold for $5,000 that originally cost $10,000 and had accumulated depreciation of $6,000. Thus, at the time of sale, it has a net book value of $4,000. We would record the following journal entry for this transaction:
What’s the cash flow from this transaction?
A
DR Cash (+A) 5,000
DR Accumulated depreciation (-XA) 6,000
CR Machine (-A) 10,000
CR Gain on sale of machine (+G) 1,000
OR
DR Cash (+A) 5,000
CR Machine, net (-A) 4,000
CR Gain on sale of machine (+G) 1,000
The cash flow from this transaction Is $5,000 and is classified as an investing cash inflow.
