21. Empresa Brava owns 25% of the common shares of Empresa Pacfica. In 2022, Pacifica reported net income of $200,000 and paid dividends in the amount of $60,000. Brava uses the indirect method to present the operational activities of the Statement of Cash Flows (EFE) for the year 2022. How did Brava present this situation?

a. A line in the EFE that says: Payment of dividends $15,000

b. A line that reads: Collection of investment income $50,000

c. An adjustment to net income adding $35,000

d. An adjustment to net income by subtracting $35,000

22. In the previous question, if Brava uses the direct method, how does it present the information?

a. A line in the EFE that says: Payment of dividends $15,000

b. A line that reads: Collection of investment income $50,000

c. An adjustment to net income adding $35,000

d. An adjustment to net income by subtracting $35,000

23. A company has two intangible assets, Patent and Goodwill. In 2022 the amortization of the Patent was $30,000. Goodwill was not amortized in 2022, but impairment was recognized for $50,000. The company uses the indirect method for operational activities in the EFE. What adjustment is made to the 2022 Net Income?

a. $80,000 subtracted

b. Add $80,000

c. Add $30,000

d. Add $20,000

24. The comparison of the balances in 2022 and 2021 of the interest receivable and interest payable accounts of a company appear below:

If the company presents the operational activities in the EFE using the indirect method, how will it present this information?

a. You will add $3,000 and subtract $5,000

b. You will add $5,000 and subtract $3,000

c. It will add $8,000

d. Will subtract $8,000

25. In 2022, the cost of goods sold was $120,000. During 2022 inventory increased $20,000 and accounts payable increased $15,000. How much did the company pay for the purchase of merchandise?

to. $125,000 b. $115,000 c. $155,000 d. $85,000