Included in Leonie’s Fixed Assets Was a Piece of Machinery

Multiple Choice

Included in Leonie’s fixed assets was a piece of machinery which cost £68 000 and on which depreciation of £32 000 had been charged. This was sold during the year for £28 000.
- what would be the effect, if any, on the income statement and the cash flow statement?

A) Show a loss on sale of fixed asset in the income statement of £8000 and show that as a cash outflow
B) Show a loss on sale of fixed asset in the income statement of £40000 and show that as a cash outflow
C) Show a loss on sale of fixed asset in the income statement of £8000 and show a cash inflow of £36000
D) Show a loss on sale of fixed asset in the income statement of £8000 and show a cash inflow of £28000
E) None of the above