Misconception · MIS:disposal-cash-flow-equals-gain-on-sale

Mistaken idea “Disposal cash flow equals the gain on sale”

Mistaken reasoning: This mistake confuses cash proceeds with an accrual result after carrying amounts and costs.

Updated Aug 21, 2026 Review due Nov 8, 2026

Why this is mistaken

Proceeds, cash transferred with the disposed business, carrying amounts, costs, and gain or loss are separate quantities. Only actual cash crosses the statement boundary.

Where to watch

When this mistake may appear

  • The disposal gain is $90,000.
Check your work

Your work may contain this mistake if:

  • Reports the gain rather than proceeds net of cash divested under the supplied facts.