Cash Flow From Operation: Why would the Profit received from the Sale of Building be recognized and not the Cash received from the sale of a company buiding.
Neither the profit nor the cash flow from selling a company building will be included in CFO (unless the company is in the business of selling buildings); the cash flow (net selling price) would be included in CFI.
However, the profit from the sale of the building would be included on the income statement, so using the indirect method for computing CFO, the profit would be subtracted from net income because the profit from selling the building is not CFO (it’s neither CF nor O).
Thank You!
Can you clarify the first sentence? Did you mean CFO?
“Neither the profit nor the cash flow from selling a company building will be included in CFA”
My pleasure.
I did. Thanks for catching that. I’ve fixed it.