Reference no: EM132794784

Problem 1: Why is depreciation added to net income in the Operating Activities category of the statement of cash flows when the indirect method is used?

Option 1: Depreciation expense is a negative amount in the Investing Activities section and therefore is a positive amount in the Operating Activities section.
Option 2: Depreciation reduced the book value of plant assets and, therefore, must be reported as an investing activity.
Option 3: Depreciation was deducted in arriving at net income on the accrual basis of accounting; however, it did not require the use of cash.
Option 4: Depreciation provides cash and therefore must be added to net income.

Problem 1: Which of the following statements is not true?

Option 1: Under IFRS, fair market values for intangibles require an active market.
Option 2: FASB standards require all research and development costs to be expensed.
Option 3: International accounting standards are more flexible in allowing the use of fair market values for intangible assets.
Option 4: IFRS require all research and development costs to be expensed.