Winkler Company sold equipment for $25,000 cash. The equipment had cost $40,000

Question

Winkler Company sold equipment for $25,000 cash. The equipment had cost $40,000 and had accumulated depreciation of $22,000 at the time of the sale. Based on this information alone, which of the following statements is correct?

Multiple Choice

Cash flow from investing activities would be less if the statement of cash flows is prepared by the direct method than if it is prepared under the indirect method.

Cash flow from investing activities would be greater if the sale of equipment is reported on the statement of cash flows under the direct method than if it is reported under the indirect method.

Cash flow from investing activities would be the same regardless of whether the statement of cash flows is prepared by the direct method or the indirect method.

The answer cannot be determined because the amount of the salvage value is unknown.

Explanation / Answer

Cash flow from investing activities would be the same regardless of whether the statement of cash flows is prepared by the direct method or the indirect method.

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