Use the Following Information to Answer Questions

Multiple Choice

Use the following information to answer questions :
In 2010, Palacio Corporation sold an automobile for $5,000. The automobile had a book value of $7,500 at the time of the sale.

-In its statement of cash flows prepared on the indirect method, Palacio should

A) classify the actual $5,000 cash inflow as a component of cash flows from financing activities.
B) add the $2,500 loss that resulted from this transaction to net income.
C) subtract the $2,500 loss that resulted from this transaction from net income.
D) add the $4,000 gain that resulted from this transaction to net income.
E) subtract the $4,000 gain that resulted from this transaction from net income.