How Is the Amortization of Patents Reported in a Statement

question 176

Multiple Choice

How is the amortization of patents reported in a statement of cash flows that is prepared using the direct method?

• A) Not reported.
• B) An increase in cash flows from operating activities.
• C) A decrease in cash flows from operating activities.
• D) A decrease in cash flows from investing activities.

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Definitions:

Obligations Cessation

Refers to the termination or discontinuation of legal duties or responsibilities, which can occur due to various reasons including the fulfillment, release, or expiration of the obligation.

Condition Precedent

A condition precedent is a contractual condition that must be fulfilled before a party's promise or obligation becomes binding.

Obligations Commencement

The starting point or effective date when obligations or duties under a contract or agreement begin.

Contractual Term

A provision or condition outlined in a contract that defines the obligations, rights, and duties of the parties involved.