When using the direct method, losses on the sale of long-term assets are added to net income in the operating activities section.

Name: When using the direct method, losses on the sale of long-term assets are added to net income in the operating activities section.
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In the direct method, operating activities are reported by showing cash receipts and payments, not adjustments to net income. Adjustments like losses on asset sales are part of the indirect method.

When Using the Direct Method, Losses on the Sale of Long-Term