Question

lincoln restaurants reported net income in 2022 of $46.10 million and depreciation expense of $49.00 million. it also reported additions to property and equipment of $163.10 million. using the indirect method of preparing the statement of cash flows, how will these items impact the 2022 statement of cash flows?

Answer 1

It  impact the 2022 statement of cash flows by : Depreciation expense $ 49.00 million will be added to net income under operating activities. And $163.10 million will be deducted in investing activities.

What is statement of cash flow ?

Statement of Cash flow can b  be defined as the statement that help to show how cash flow in and out of a company or organization.

Depreciation expenses as well as property and equipment will have an impact on the statement of cash flow when making use of indirect method to prepare the statement of cash flow.

Based on this the  depreciation expense amount will be added to the company net income under operating activities while  the property and equipment will be deducted  from the investing activities.

Therefore depreciation expense will have impact on the statement of cash flows when using indirect method.

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