Atkins Corporation has provided the following information for the year ended December 31, 2019: The equipment account balance increased by $210,000 from the beginning of the year to the end of the year.The equipment accumulated depreciation account balance increased by $36,000 from the beginning of the year to the end of the year.Equipment costing $52,000 was sold during the year resulting in a $11,500 gain.Depreciation expense recorded on the equipment during the year was $66,500. Which of the following statements is incorrect with respect to preparation of the statement of cash flows? Assume that the equipment purchase and sale resulted in cash flows. Multiple ChoiceUsing the indirect method, net income is increased by the $66,500 depreciation expense.A $33,000 cash inflow is reported from the equipment sale.A $63,500 cash inflow is reported from the equipment sale.Using the indirect method, net income is decreased by the $11,500 gain on the sale of the equipment.

Cash flows from operating activities: It is a section of Statement of cash flow that explains the…

Answered: Atkins Corporation has provided the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Atkins Corporation has provided the following information for the year ended December 31, 2019:

The equipment account balance increased by $210,000 from the beginning of the year to the end of the year.
The equipment accumulated depreciation account balance increased by $36,000 from the beginning of the year to the end of the year.
Equipment costing $52,000 was sold during the year resulting in a $11,500 gain.
Depreciation expense recorded on the equipment during the year was $66,500.

Which of the following statements is incorrect with respect to preparation of the statement of cash flows? Assume that the equipment purchase and sale resulted in cash flows.

Multiple Choice

Using the indirect method, net income is increased by the $66,500 depreciation expense.
A $33,000 cash inflow is reported from the equipment sale.
A $63,500 cash inflow is reported from the equipment sale.
Using the indirect method, net income is decreased by the $11,500 gain on the sale of the equipment.

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