- If the equity method is adopted to deal with long-term investment in equity securities, which of the following will increase the book value of long-term investment in equity securities? (A) The investee company has a net profit during the investment year. (B) The investee company pays dividends. (C) The investee company loses money during the investment year. (D) The investor company sells long-term equity investment to generate a gain. UWhen preparing a statement of cash flows using the indirect method to calculate the cash flows from operating activities, which of the following treatments is correct for the adjustment items under the net income for the current period? (A) Depreciation expense is a deduction item from the net income. (B) The increase in accounts receivable is a deduction item from the net income. (C) The increase in salaries payable is a deduction item from the net income. (D) The decrease in prepaid expenses is a deduction item from the net income