Company P purchased an 80% interest in Company S on January 1, 2016, at a price in excess of book value, such that a patent arises in the consolidation process.As a result of amortizing the patent on the consolidated income statement, an adjustment would be required in which section of the consolidated statement of cash flows? ?
$\begin{array} { c c c l }
\text { Operating } & \text { Investing } & \text { Financing } & \text { No Adjustment } \\end{array}$

Question

Company P purchased an 80% interest in Company S on January 1, 2016, at a price in excess of book value, such that a patent arises in the consolidation process.As a result of amortizing the patent on the consolidated income statement, an adjustment would be required in which section of the consolidated statement of cash flows? ?
$\begin{array} { c c c l } 
\text { Operating } & \text { Investing } & \text { Financing } & \text { No Adjustment } \\end{array}$

Quizplus · Accepted Answer

In the case of amortizing the patent, the adjustment affects only the operating section of the consolidated statement of cash flows as it is a non-cash expense. There would be no impact on the investing or financing sections. Therefore, the correct choice is A: Yes (for the operating section) and No for the remaining sections.

Company P Purchased an 80% Interest in Company S on January