Chapter 12, Problem 12E

(Chapter Supplement B) Computing and Reporting Cash Flow Effects of Sale of Plant and Equipment

During two recent years Perez Construction, Inc., disposed of the following plant and equipment:

	Year 1	Year 2
Plant and equipment (at cost)	$ 75,000	$13,500
Accumulated depreciation on equipment disposed of	40,385	3,773
Cash received	17,864	12,163
Gain (loss) on sale	(16,751)	2,436

Required:

1. 1. Determine the cash flow from the sale of property for each year that would be reported in the investing activities section of the cash flow statement.
2. 2. Perez uses the indirect method for the operating activities section of the cash flow statement. What amounts related to the sales would be added or subtracted in the computation of Net Cash Flows from Operating Activities for each year?