# CFI Help

Sold equipment for 30K cash Paid 110K for it originally acc depreciation 70K what’s impact on CFI?

and then same Q but this one: Increase in PPE - \$480 Equipment sold for \$720, cost \$1920 with acc depreciation of \$1440.

1. CFI gets 30k - Loss of 10 k on income statement must be added from CFO 2. CFI gets 240k - Gain of 240 on net income must be deducted from CFO

first one correct, second one incorrect. This is what confuses me, the second one is 2400

720 - 480 = 240, asset is removed from balance sheet, depreciation is reversed and book value removed.

mambovipi Wrote: ------------------------------------------------------- > first one correct, second one incorrect. This is > what confuses me, the second one is 2400 I don’t understand, can you post more details and exactly what it’s asking. 2400 makes no sense, where do they even get that number?

They are asking for the total change in CFI here’s the xplanation: increase in ppe ----------------480 cost of disposed equipment-1920 --------------------------------------------- Additions to ppe - 2,400

What?? still dont make sense. the signs are changed. how can adding 480 - 1920 give 2400???

Here’s the whole thing I/S Sales 34200 COGS (28800) Dep (2400) Int expense (600) Gain on sale of equipment 240 Taxes (1080) Additional info: increase in Acc Rec 1200 Decrease in Inventory 1440 Increase in Acc pay 480 Increase in PPE (cost) 480 Incrase in bank loans 1320 Increase in common stock 720 Divs paid 720 the equipment was sold for 720 and cost 1920 with accumulated depreciation of 1440. What’s CFI?

mambovipi Wrote: ------------------------------------------------------- > They are asking for the total change in CFI here’s > the xplanation: > > increase in ppe ----------------480 > cost of disposed equipment-1920 > --------------------------------------------- > Additions to ppe - 2,400 That makes no sense. You also asked for the impact on CFI, not the additions to PPE.

SOrry got the divs wrong not that it matters in this case but here it is: I/S Sales 34200 COGS (28800) Dep (2400) Int expense (600) Gain on sale of equipment 240 Taxes (1080) Additional info: increase in Acc Rec 1200 Decrease in Inventory 1440 Increase in Acc pay 480 Increase in PPE (cost) 480 Incrase in bank loans 1320 Increase in common stock 720 Divs paid 240 the equipment was sold for 720 and cost 1920 with accumulated depreciation of 1440. The cash flow from investing under U.S GAAP is: -1680 -2400 +240 -1200 Answer: increase in ppe --------------------480 cost of disposed equipment-----1920 --------------------------------------------- Additions to ppe = 2,400 Since additions to PPE were 2400 and 720 was received from disposals, the net outflow on investing is 2400 less 720 = 1680.

What? based on above info, -480 + 720 is what goes thru you CFI. That’s all i can see, what place you picking this question from, they confusing you i think.

Pepp are you sure about that cos this Q is from a mock from kaplan financial.