Last answered:

13 Mar 2023

Posted on:

08 Mar 2023


Resolved: Profit or Loss on Assets Disposal

In a situation where we realised profit or loss from the sales of an asset, how should it be accounted for in the Cash Flow Statement?

1 answers ( 1 marked as helpful)
Posted on:

13 Mar 2023


Hi Bashir, 

When a company sells fixed assets at a profit (or loss), this reflects both the Operating and Investing activities in the Cash Flow Statement. 

The sale is recorded as follows:

Operating activities:

Add: loss on sale of assets

Less: profit on sale of assets

These are adjustements to the Net Income amount, as the profit/loss of the sale has already been included in Net Income in the Income Statement. So, we have to exclude them in the Cash Flow Statement. 

Investing activities:

Add: proceeds from sale of assets

Less: purchases of assets

This is the amount of actual cash received/paid in the transaction. 

I hope you find this helpful. Please let us know if you have any other questions. 


The 365 Team

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