Short Answer
Hines Co. owned an asset (equipment) that originally cost $24,000. The company sold the asset on January 1, 2014 for $8,000 cash. Accumulated depreciation on the day of sale amounted to $18,000. Based on this information, indicate whether each of the following statements is true or false.
1. The sale would result in a decrease in total assets for Hines
2. The final stage in the life cycle of a tangible asset is its disposal
3. In 2014, Hines would show an $8,000 cash inflow in the investing activities section of the cash flow statement
4. In 2014, Hines would recognize a $2,000 cash inflow in the operating activities section of the statement of cash flows
5. The sale of the asset would result in a $2,000 gain on the income statement
Correct Answer:
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1. False
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Correct Answer:
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2...
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