A Software Company Acquires a Smaller Company in Order to Acquire

question 63

Multiple Choice

A software company acquires a smaller company in order to acquire the patents that it holds.Where will the cost of this acquisition be recorded on the statement of cash flows?

• A)as an outflow under Operating Activities
• B)as an outflow under Investment Activities
• C)as an outflow under Financial Activities
• D)The acquisition would not be recorded on the statement of cash flows.

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Definitions:

Preoperational

The Preoperational stage is the second stage in Piaget's theory of cognitive development, occurring from ages 2 to 7, where children begin to engage in symbolic play but lack the ability to perform operations or see things from the perspective of others.

Words

Symbols or combinations of letters that represent or convey meaning in spoken or written language.

Actions

The process or act of doing something, typically to achieve an aim or to navigate in one's environment.

Sensorimotor

Pertaining to the processing of sensory information to produce motor activity; often related to developmental stages in infants.