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Can u please tell me whether there is cash flow or not when gain or loss takes place on sale of fixed assets?
There is a cash receipt of whatever the sale proceeds were. The gain or loss on sale is not a cash flow.
Then why we consider gain or loss in calculating cash received from sale of equipment in investing activities under cash flow statement……..? Formula we use is Historical cost of asset – accumulated depreciation and plus minus gain or loss….? please help me to clarify my concept…?
You are now talking about cash flow statements for financial accounts, although you have asked the question under an F9 lecture!
However, the logic is exactly the same – on the statement of cash flows, under investing activity, we show the cash received from sale of assets, precisely because it is a statement of cash flows. The ‘formula’ you quote is only relevant if you are not told the cash received and have to work it out from other information. In Paper F9 you are always told the cash received, and that is all that we want.
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