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  • 1.  Under indirect method, gain for sold machine is reported as operating activities or investing activities

    Posted 09-05-2025 12:45 AM

    XX company sold its machines for a gain of $100000, if XX company use the indirect method, how should the transaction be reported in the statement of cash flows



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    Jianjian Dong
    Accountant
    LA Verne CA
    United States
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  • 2.  RE: Under indirect method, gain for sold machine is reported as operating activities or investing activities

    Posted 09-06-2025 01:22 AM
    The realized gain must be deducted from net income when calculating net cash flow from operating activities.
    The total cash received from the sale of machine is presented on SOCF as a cash inflow from investing activities.



    Original Message


  • 3.  RE: Under indirect method, gain for sold machine is reported as operating activities or investing activities

    Posted 09-06-2025 03:12 AM

    When you have gain and you use indirect cash flow method so record the gain as operating activities as deduction (non cash which is already added in net income) and the total cash proceeds need to be recorded as investing activities which is inflow of cash.

    So

    Operating activities 

    Minus: 100000

    Investing activities 

    Add: total cash proceeds 



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    Fazal Jamil
    Chief Executive Officer
    RAK
    United Arab Emirates
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    Original Message


  • 4.  RE: Under indirect method, gain for sold machine is reported as operating activities or investing activities

    Posted 09-09-2025 01:17 AM

    See ,to understand this u need to recall ,what is the purpose of cash flow statement,Cfs prepare to see actual cash flow.indirect method ,cash flow from operating activities start from net income and if u know income statement include all cash and non cash benefits and cost .so , because of that net income also include all these non cash things .and to calculate cash flow from operating activities all non cash things to be reversed like ,which means gains and benefits should be deducted and loss and non cash expenses should be added to get actual cash flow that why it will get deduct to reduce gain amount from net income to show actual cash flow ,because gain increased net income which was not actual cash flow ,to come on actual cash gain ( non cash benefit should be deducted) 



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    Kushal Singhal
    Other
    Jattari Aligarh
    India
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    Original Message


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