Question
During the 2020 fiscal year, Donckers Inc. was forced to sell one of its properties to the local government. The land had a carrying value
During the 2020 fiscal year, Donckers Inc. was forced to sell one of its properties to the local government. The land had a carrying value of $150,000 and $160,000 cash was received from the sale, thus resulting in a gain of $10,000. If Donckers uses the indirect method to prepare its yearly statement of cash flows, it should adjust for the effects of this sale by ____________________.
A) deducting the $10,000 gain in the operating activities section, while also reporting the $160,000 cash inflow from the sale as an investing activity.
B) adding the $7,000 gain in the operating activities section, while also reporting the $157,000 cash inflow from the sale as an investing activity.
C) deducting the $7,000 gain in the operating activities section, while also reporting the $160,000 cash inflow from the sale as an investing activity.
D) adding the $10,000 gain in the operating activities section, while also reporting the $160,000 cash inflow from the sale as an investing activity.
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