Question
Reliance Corporation has provided the following information for the year ended December 31, 2016: The equipment account balance increased $218,000. The equipment accumulated depreciation account
Reliance Corporation has provided the following information for the year ended December 31, 2016:
The equipment account balance increased $218,000.
The equipment accumulated depreciation account balance increased $36,800.
Equipment costing $53,600 was sold during the year resulting in a $12,700 gain.
Depreciation expense recorded on the equipment during the year was $66,800.
Which of the following statements is correct with respect to determining cash flow from operating activities?
Using the indirect method, net income is decreased by the $30,000 sales price of the equipment.
Using the indirect method, net income is increased by the $66,800 depreciation expense.
Using the indirect method, net income is increased by the $12,700 gain on the sale of the equipment.
Using the indirect method, net income is increased by the $36,800increase in the accumulated depreciation account balance.
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