A Software Company Acquires a Smaller Company in Order to Acquire

question 94

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.
• E)as an inflow under Financial Activities

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Definitions:

Extraction Quantity

The volume or amount of natural resources, such as minerals, oil, or gas, that is removed from the earth or harvested.

Future Profits

Future profits represent the anticipated earnings or financial gains a business expects to achieve in the coming periods.

Coal Mining

The process of extracting coal from the ground, an important activity for generating electricity and various industrial processes.

User Cost

The cost of using a good or service, which encompasses not only the purchase price but also the costs associated with using and maintaining it.