below indicate in narrative form how the transaction would be presented within cash flows from operations if the direct method were used? An example is given.

Item Depreciation effect on cash from operations-direct method

1)Amortization expense, 5,000 1)Would not appear within cash flow from operations

The company recorded a $120,000 2)

impairment of a copyright.

The copyright will still be used in the business.

2)The company record a $40,000

recovery of an impairment,

relating to a building being held for disposal.

3)The company recorded 20,000

in interest income accrued on an

interes-bearing notes receivable. T

he stated rate was 12% and the yield rate was 10%

4)The company received @25,000 cash

representing interest on its debt

investment(Held-to Maturity),

which it had purchased at a discount.

5)At the end of the current year,

the company paid 50,000 to

overhaul the engine of a company truck,

which extended the useful life by 4 years.

This amount was appropriately capitalized.

6)During the year, the company began

requiring certain customers to pay in advance.

$56000 in cash was received

in advance from customers.

For these customers, 43000 was earned as revenue

7)The company owns 45% of the outstanding shares of an investee.

During the year, the investee paid a total of 500,000 in dividends,

and recorded a net loss of 750,000

8)During the year, the company began renting a machine.

The amount of rent paid in advance was 65,000.42,000

of rent expense was recorded during the year.