Capital gain tax paid on sale of fixed assets should be classified as
This question was previously asked in
Shift 29/05/2023 3:30 PM - 6:30 PM
A
Cash inflow from Operating Activities
B
Cash outflow from Operating Activities
C
Cash inflow from Investing Activities
D
Cash outflow from Investing Activities
Correct Answer
Cash outflow from Investing Activities
Detailed Explanation
The capital gain tax paid on the sale of fixed assets should be classified as:
- Cash outflow from Investing Activities
When a fixed asset is sold, any taxes paid on the capital gains resulting from the sale are considered a part of the cash outflow from investing activities. This is because the tax payment is associated with the proceeds from the sale of the asset, which falls under investing activities in the statement of cash flows.
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