At the beginning of the current year, an entity sold used equipment for ₱100,000, which is equal to its carrying value. During the year, the entity replaced the equipment by paying cash of ₱150,000 and signing a note payable amounting to ₱100,000 for the new equipment. How should these equipment transactions be reported in the entity’s statement of cash flows? a. Cash outflow equal to the cash paid less the cash received. b. Cash outflow equal to the cash paid and note payable less the cash received. c. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable. d. Cash inflow equal to the cash received and a cash outflow equal to the cash paid.
At the beginning of the current year, an entity sold used equipment for ₱100,000, which is equal to its carrying value. During the year, the entity replaced the equipment by paying cash of ₱150,000 and signing a note payable amounting to ₱100,000 for the new equipment. How should these equipment transactions be reported in the entity’s statement of cash flows? a. Cash outflow equal to the cash paid less the cash received. b. Cash outflow equal to the cash paid and note payable less the cash received. c. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable. d. Cash inflow equal to the cash received and a cash outflow equal to the cash paid.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of the current year, an entity sold used equipment for ₱100,000, which is equal to its carrying value. During the year, the entity replaced the equipment by paying cash of ₱150,000 and signing a note payable amounting to ₱100,000 for the new equipment. How should these equipment transactions be reported in the entity’s statement of cash flows ?
a. Cash outflow equal to the cash paid less the cash received.
b. Cash outflow equal to the cash paid and note payable less the cash received.
c. Cash inflow equal to the cash received and a cash outflow equal to the cash paid and note payable.
d. Cash inflow equal to the cash received and a cash outflow equal to the cash paid.
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