On the statement of cash flows (indirect method), the loss on the sale of an office building by Apple Inc. can be found in the

Question

BlackTom AI · Accepted Answer

To approach this, start by identifying how the indirect method presents the cash flows.
Option 1: financing activities section. This is not correct because financing activities involve cash flows related to borrowing, repaying debt, issuing stock, or paying dividends. A loss on a sale of an asset is not a financing activity.
Option 2: operating activities section. This is the right area for the loss on the sale of a building when using the indirect method. In the indirect method, the company starts with net income and then adjusts for non-cash items and changes in working capital. A loss on sale of a fixed asset is a non-cash deduction to net income and is added back to net income in the operating activities section to reflect cash provided by operating activities. The cash proceeds from the sale itself would appear in investing activities, but the loss affects operating activities as an adjustment.
Option 3: investing activities section. While the actual cash received from the sale (the proceeds) would be reported in investing activities, the loss itself is not classified there in the indirect method. The loss is an accounting adjustment, not a cash inflow/outflow category for investing activities.
Option 4: None of the suggested answers. This would be incorrect because there is a valid location for the loss within the indirect method framework, namely the operating activities section.
In summary, the indirect method uses net income as a starting point and then adds back non-cash losses (like the loss on sale of an asset) in the operating activities section, while the cash from the sale itself goes to investing activities.

On the statement of cash flows (indirect method), the loss on the sale of an office building by Apple Inc. can be found in theSingle choice

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