How Does Depreciation Appear on the Statement of Cash Flows

question 84

Multiple Choice

How does depreciation appear on the statement of cash flows under the direct method?

• A)Added in the operating activities section
• B)Subtracted in the operating activities section
• C)In the investing activities section since it relates to plant assets
• D)It will not be reported since it is not a cash flow.

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Definitions:

Fair Market Value

The price at which property would sell between a willing buyer and a willing seller, each having reasonable knowledge of all relevant facts and not under any compulsion to transact.

Appraised Value

The estimated monetary value of an asset determined by a professional appraiser at a specific point in time.

Depreciated

Refers to the reduction in the recorded value of an asset over time due to wear and tear, obsolescence, or age.

Equipment

Tangible assets used in operations, such as machinery or office hardware, that play a key role in business operations and productivity.