Exhibit 10 During 2004 Klandy Corp

question 35

Multiple Choice

Exhibit 10.6
Use the Information Below for the Following Problem(S)
You are provided with the following information for the Klandy Corporation.
$\begin{array}{lccc} &\ 2003 & 2004 \\ \text { Net Income } & \$ 1200 & \$ 1500 \\\text { Depreciation } & \$ 200 & \$ 300 \\\text { Total Current Assets } & \$ 700 & \$ 900 \\\hline\end{array}$
During 2004 Klandy Corp. made capital expenditures totaling $500 and disposed property worth $400.
-Refer to Exhibit 10.6.The firm's cash flow from operating activities for the year 2004 is

• A) $2100
• B) $1900
• C) $1800
• D) $1700
• E) $1600

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Definitions:

Impairment Loss

A reduction in the recoverable value of an asset below its carrying amount, requiring the asset's value to be written down.

Effective Tax Rate

The mean rate at which a person or business is charged with taxes, determined by dividing the total amount of taxes paid by the amount of income that is subject to tax.

Cost Method

A method of accounting for investments where the investment is recorded at cost and only dividend income is recognized.

Goodwill Impairment

A decrease in the value of goodwill, indicating that the acquired company is not performing as expected.