9. Question ID: ICMA 13.P2.2055 (Topic: The Indirect Method)
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Can you please explain me why Interest expense and income tax expenses are not considered here while calculation cash flow from operating activities
Garnett Company’s year-end income statement shows the following.
Revenues $5,000,000 Selling and general expenses (including
depreciation expense of $200,000)
3,800,000 Interest expense 50,000 Gain on sale of equipment 40,000 Income tax expense (including long-term
deferred tax expense of $30,000)
<u> 320,000</u> Net income $ 870,000
During the year, Garnett’s noncash current assets rose by $100,000, and current liabilities increased by $150,000. On its statement of cash flows, Garnett would report Cash Provided by Operating Activities of
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