Answer:
Blue Co will report a loss of $18,000 on the statement of cash flows in the cash flows from investing activities section.
Explanation:
Step 1: Determine the total cost of the asset
The total cost can be expressed as;
T=A+D
where;
T=total cost of the asset
A=asset purchase cost
D=accumulated depreciation
In our case;
T=unknown
A=$15,000
D=$10,000
replacing;
T=15,000+10,000=$25,000
Total cost of the asset=$25,000
Step 2: Determine the cash flow after the sale
This can be expressed as;
Cash flow=selling price-total cost of the asset
where;
selling price=$7,000
total cost of the asset=$25,000
replacing;
Cash flow=7,000-25,000=-$18,000
Blue Co will report a loss of $18,000 on the statement of cash flows in the cash flows from investing activities section.
Answer:
an increase of $7,000 in the investing activities section
Explanation:
The book value of the assets is $5,000 (its cost minus accumulated depreciation of 15000-10000).
If the book value is $5,000 and it sells the assets at $7,000, it thus registered a gain of$2,000 (7000-5000)
They recognized a gain of $2,000. $7,000 - ($15,000 - $10,000) = $2,000. The gain will be subtracted from net income in the Operating Activities section. The receipt of cash of $7,000 will be reported as an increase in the Investing Activities section.
