C b. Depreciation expense $12,800, accumulated depreciation $25,600 CDepreciatio
ID: 2517660 • Letter: C
Question
C b. Depreciation expense $12,800, accumulated depreciation $25,600 CDepreciation expense $12,000; accumulated depreciation $12,000 dDepreciation-expense $12,000; accumulated depreciation $24,000 poin QUESTION 6 In 2015 Vickers Company purchased equipment for $140,000 and recorded $20,000 in depreciation expense. How does the recording of the equipment purchase and the depreciation expense affectt flows? . he statement of cash a. Cash flow for operating activities ($20,000); cash flow for investing activities ($140,000) b Cash flow for investing activities ($160,000) CCash flow for operating activities ($140,000) d Cash flow for investing activities ($140,000) C 1 points QUESTION 7 On January 1, 2017, Golden Company purchased a delivery truck for $64,000. The van was estimated to have a 5ear useful life or 100 000 miles Salvage value was estimated at $4,000, The van was driven 25,000 milesExplanation / Answer
Effect in the cash flow statement:
1. Depreciation is a non cash expenditure debited to the Profit & Loss Statement. Hence, in the cash flow statement, depreciation needs to be added back to the net income to arrive at the cash flow from operating activities
2. Purchase of equipment is a capital expenditure incurred for the purpose of business. It is an investment in the fixed assets of the business in order to assist in production of goods or provision of services. Hence, purchase of equipment is to be treated as a cash outflow in the cash flow statement under the head cash fow from investing activities.
Therefore, the correct option is Option A.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.