Ulbrich Company reports its income from investments under the equity method and

Question

Ulbrich Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in McHugh Co. during the current year. No dividends were declared or paid by McHugh during the year. On Ulbrich's statement of cash flows (indirect method), the $25,000 should

be shown as a addition to net income in the cash flows from operating activities section.

be shown as a deduction from net income in the cash flows from operating activities section.

be shown as cash inflow from investing activities.

be shown as cash outflow from financing activities.

be shown as a addition to net income in the cash flows from operating activities section.

be shown as a deduction from net income in the cash flows from operating activities section.

be shown as cash inflow from investing activities.

be shown as cash outflow from financing activities.

Explanation / Answer

The $25,000 should be shown as a deduction from net income in the cash flows from operating activities section.

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