When preparing a statement of cash flows using the direct method,amortization of a patent is
A) shown as an increase in cash flows from operating activities.
B) shown as a reduction in cash flows from operating activities.
C) included with supplemental disclosures of noncash transactions.
D) not reported in the statement of cash flows or related disclosures.

Question

Quizplus · Accepted Answer

Amortization of a patent is a non-cash expense and therefore does not appear in the statement of cash flows when using the direct method. It affects net income but does not impact cash directly, hence it is not reported in the cash flow statement or related disclosures.

When Preparing a Statement of Cash Flows Using the Direct