In a Statement of Cash Flows, the amortization of goodwill for a company with substantial operating profits should be presented as a(n):
A) Inflow from operating activities.
B) Inflow from investing activities.
C) Outflow from investing activities.
D) Adjustment to net income in the reconciliation of net income to cash from operating activities.

Question

Quizplus · Accepted Answer

Amortization of goodwill is a non-cash expense that is added back to net income in the reconciliation of net income to cash provided by operating activities on the Statement of Cash Flows. It does not represent a cash inflow or outflow but an adjustment to reconcile net income to the cash generated from operating activities.

In a Statement of Cash Flows, the Amortization of Goodwill