Question

If ABC Inc. buys a piece of equipment for $50,000, will use it in the business for 5 years and in 5 years expects to sell it for $10,000. What should ABC Inc. show in its cash flow statement in the year of purchase

Answer 1

The ABC Inc. show in its cash flow statement in the year of purchase is $50,000

Explanation:

The cash flow statement deals with the inflow and outflow of cash. It comprises of operating activities, investing activities, and financing activities.  

The investing activities deal with the purchase and the sale transactions of the long term assets i.e building, plant, equipment, furniture, and fixtures, etc

In the given scenario, the equipment will be bought for $50,000 and the same is shown in the cash flow statement

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