Answer:
b. $100,000 subtraction from net income // $400,000 cash inflow
Explanation:
If Bear Co. prepares its statement of cash flows using the indirect method, and Bear sold equipment with a carrying value of $500,000 for cash of $400,000. Then Bear should report the transaction in the operating and investing activities sections of its statement of cash flows as: $100,000 subtraction from net income // $400,000 cash inflow .
The reason is that although cash of $400,000 is coming into the company through the sale of asset,however the asset is sold at a loss of $100,000
Loss on asset disposal (and losses generally) usually decreases the Net income of businesses.
