A company bought $1,050,000 of equipment with an expected life of 26 years and no residual value. After 22 years the company sold the equipment for $124,500. If it uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows?

	$124,500 is recorded as a cash inflow from investing activities and no other sections of the statement are affected.
	$124,500 is recorded as a cash inflow from investing activities and $37,038 is added to convert net income to net cash flow from operating activities.
	$124,500 is recorded as a cash inflow from operating activities.
	$124,500 is recorded as a cash inflow from investing activities and $37,038 is subtracted to convert net income to net cash flow from operating activities.