Oyster Corp. reports its income from investments by the equity method and recognized income of $ 25,000 from its investment in Pearl Ltd. during the current year, even though no dividends were declared or paid by Pearl during the year. On Oyster's statement of cash flows (indirect method), the $ 25,000 should

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Under the equity method, income recognized from an investment increases the investor's income statement earnings but does not affect cash flow since no actual cash is received. Therefore, on the statement of cash flows prepared using the indirect method, this non-cash income must be deducted from net income to reconcile net income to net cash provided by operating activities.