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In ASC 230-10-45-25, FASB states that when preparing the Statement of Cash Flows, the direct method is encouraged, but the indirect method is also allowed.

In ASC 230-10-45-25, FASB states that when preparing the Statement of Cash Flows, the direct method is encouraged, but the indirect method is also allowed. Assume that you work on the corporate accounting team for a new company and the company is trying to determine whether to use the direct or indirect method. Choose which method you would use and clearly explain two specific reasons and the rationale to support your choice.

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