When Preparing the Operating Activities Section of the Statement of Cash

question 198

True/False

When preparing the operating activities section of the statement of cash flows using the indirect method, non-operating gains are added to net income.

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Definitions:

Fair Value Adjustments

Adjustments made to the carrying value of an asset or liability to reflect its current market value.

Pre-acquisition Equity

The equity value of a company before being acquired by another entity, used to assess the financial status and baseline worth of the target company.

Revaluation Surplus

An increase in the carrying amount of an asset, recognized in equity, when its fair value exceeds its carrying amount.

Pre-acquisition Entry

An accounting entry made to adjust the values of the acquirer's and acquiree's assets and liabilities to fair value at the acquisition date.