Exhibit 21-2
In preparation for completing the statement of cash flows using the spreadsheet method, Williams Company provided the following information relating to patents for 2016:
-Refer to Exhibit 21-2. The Cash Flows from Operating Activities section prepared using the indirect method would include which of the following deductions or add-back amounts related to patents?
A) $(310)
B) $(290)
C) $ 290
D) $ 600

Question

Exhibit 21-2
In preparation for completing the statement of cash flows using the spreadsheet method, Williams Company provided the following information relating to patents for 2016: 
-Refer to Exhibit 21-2. The Cash Flows from Operating Activities section prepared using the indirect method would include which of the following deductions or add-back amounts related to patents?
A) $(310) 
B) $(290) 
C) $ 290 
D) $ 600

Quizplus · Accepted Answer

The indirect method for preparing the Cash Flows from Operating Activities section requires that non-cash expenses be added back to net income to arrive at cash flow from operating activities. Patents are an intangible asset and are not a cash expense. Therefore, the amortization expense related to patents would be added back to net income when preparing the Cash Flows from Operating Activities section using the indirect method.

Exhibit 21-2 In Preparation for Completing the Statement of Cash Flows Using