Question
A company recorded the following activities in 2018: $5 million in capital expenditures were made in 2018 $4 million in depreciation expense was recognized in
A company recorded the following activities in 2018: $5 million in capital expenditures were made in 2018 $4 million in depreciation expense was recognized in 2018 $3 million in affiliate income recognized on the income statement from a 25% investment in an affiliate $1 million of insurance proceeds were received in cash due to hurricane damage on the companys corporate headquarters Based only on the information provided, calculate the impact of the activities described above on the companys 2018 operating income and cash flows (ignore taxes).
A. Operating income decreased by $1.0 million. Cash flows decreased by $4.0 million.
B. Operating income decreased by $5.0 million. Cash flows increased by $6.0 million.
C. Operating income decreased by $4.0 million. Cash flows decreased by $4.0 million.
D. Operating income decreased by $6.0 million. Cash flows decreased by $1.0 million.
E. Operating income decreased by $6.0 million. Cash flows decreased by $3.0 million.
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