Accounting & the 3 Statements
You sell a building with a book value of $100 for $150 cash. Walk me through the three statements (25% tax). Why is the gain subtracted in operating cash flow?
Model answer
Income statement: you record a $50 gain on sale (proceeds $150 − book value $100) → pre-tax income +$50; net income +$50 × (1−25%) = +$37.50. Cash flow statement: start at net income +$37.50, then…
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