CIMA BA3 · Chapter 12 · Question 8 of 10
A company sells a machine at a profit. How is this reflected in the statement of cash flows prepared using the indirect method?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The profit is deducted from profit before tax, and the sale proceeds are shown under investing activities
Explanation
The profit on disposal is included in profit before tax but is not an operating cash flow, so it is deducted in the reconciliation. The full cash proceeds are then shown as an investing inflow.
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