Question 4 of 20 Select the best answer for the question 4 A

Question 4 of 20: Select the best answer for the question. 4. A company sold an asset with a book value of $56,000 for $35,000 cash. Which of the following is a true statement? O A. Loss on sale equals $21,000 and Cash inflow equals $35,000 o B. Loss on sale equals $56,000 and Cash inflow equais $56,000 c. Loss on sale equals $35,000 and Cash inflow equals $35,000. D. Loss on sale equals $35,000 and Cash inflow equals $21,000. Mark for review (Will be highlighted on the review page) REDESIGNED. RELIABLE READY FOR YOU

Solution

The Answer is “A. Loss on sale equals $21,000 and cash inflow equals $35,000 “

If any asset sold at less than it’s book value, the difference between the book value and the sale value shall be treated as a “ Loss on sale of assets “ and the proceeds from the sale shall be treated as the “ cash inflow” to the firm

Loss on sale = Sale Value – Book Value

= $35,000 – 56,000

= $21,000 (Loss)