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Why deduct a gain and add back a loss

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Reference no: EM132686034

In the Statement of Cash Flows, we are told to deduct any "Gain on Sale of Long Term Assets" from the Operating activities section - for that matter, we are told to add back any "Loss on Sale of Long Term Assets" when computing Cash Flows from Operating Activities.

Problem 1: Explain (in two or three sentences) why we deduct a gain and add back a loss when computing Cash Flows from Operating Activities. Please give more than a one sentence response.

Reference no: EM132686034

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