Which of the Following Statements Is Not True with Respect

question 29

Multiple Choice

Which of the following statements is not true with respect to the statement of cash flows for a consolidated entity?

• A)The statement may be prepared using either the direct or the indirect method.
• B)Noncontrolling interest share will be added back to cash flows from operating activities under the indirect method.
• C)Payment of dividends from the subsidiary to the parent will appear on the statement of cash flows as a financing activity.
• D)If the subsidiary does not use the same method (direct or indirect)as the parent,they must convert their separate statement of cash flows first to the same method that the parent uses,and then the two statements are consolidated.

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Definitions:

Financial Leases

A type of lease where the lessee has use of the asset for a significant portion of its useful life, and the lease terms closely resemble the conditions of outright ownership.

Capitalized

To be capitalized means to record an expense as an asset on the balance sheet rather than an immediate expenditure, spreading its impact over its useful life.

Lease Obligations

Financial commitments arising from lease agreements, which may include future lease payments for rented equipment or property.

Coupon Rate

The rate of interest paid yearly on a bond, represented as a percentage of its face value.